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PostPosted: Tue Apr 15, 2008 11:43 pm    Post subject: Tin prices break new records. Reply with quote

UPDATE: LME Tin Hits High On Indonesia Plan To Limit Mining


LONDON (Dow Jones)--Tin traded on the London Metal Exchange hit a new record high Tuesday after Indonesia, the world's largest tin exporter, said it is planning to limit the mining area for metals including tin.

The metal is likely to rise further as the news indicates output growth in Indonesia will be limited, traders and analysts said.

As of 1140 GMT, LME tin had hit a new, record high of $21,300 a metric ton, above its previous record high of $20,990/ton.

The metal has fallen back to $21,000/ton, up 1% from Monday's kerb close, after the initial reaction, but the expectation of ongoing supply tightness will continue to support the metal's higher price, a London-based trader said.

Barclays Capital expects prices to hit $22,000/ton due to supply problems and lower output from Indonesia and China.

Indonesia said Tuesday that it plans to reduce the area that metal and coal companies can mine to prevent monopolies or industry domination. The country said companies will face a limit in exploration rights for metals such as tin to 100,000 hectares per metal. The exploitation limit will be scaled down to 25,000 hectares per company per metal, said Airlangga Hartato, chairman of a parliamentary commission in charge of energy and mining issues.

Indonesia currently doesn't impose any limits on land area exploration and exploitation. The plans discussed will be included in a mining bill that is expected to be passed by August. Existing contracts to mine won't be affected, Hartato said.

This comes as LME warehouse inventories are falling, currently at a near four-year low of 7,980 tons.

"Tin's supply problems continue to underpin the price," Fortis Bank said. "Weak supply has manifested itself in falling stocks."

Indonesia's output is already plagued by shutdowns. The Indonesian government closed dozens of small-scale smelters due to its concerns they were purchasing tin ore illegally, damaging the environment and evading taxes in late 2006. Many smelters have resumed operations, but the government continues to monitor the situation and periodically halts operations.

Additionally, Indonesia's government said it will cap annual tin output at 90,000 tons from this year to slow the depletion of the country's metal reserves.

Indonesia produced 80,000 tons of tin last year, the government said. In 2006, the country's tin output was halved to about 60,000 tons from about 120,000 tons in 2005 after the government crackdown on illegal tin smelters.

-By Devon Maylie; Dow Jones Newswires; +44 (0)20 7842 9483; devon.maylie@dowjones.com

(END) Dow Jones Newswires

April 15, 2008 07:59 ET (11:59 GMT)
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