Timah's tin output seen at 40,000T in 2003

Indonesia's PT Timah Tbk, the world's largest integrated tin miner, said on Tuesday its refined tin output was estimated to reach 40,000 tons in 2002, up from 38,081 tons in 2001.

Traders said the increase might have little impact on the global market, which is expected to record a supply deficit of up to 25,000 tons in 2003. The market recorded a surplus of around 10,000 tons last year.

Timah said this year's production would be steady at 40,000 tons, adding that declines in tin inventories on the London Metal Exchange (LME) may push up prices to $5,000 a ton, a level last seen in early 2001.

LME tin was quoted at $4,515 a ton on Monday, compared with $4,610 a ton last Friday.

"Our preliminary estimates show that refined tin output will reach around 40,000 tons in 2002, more than our earlier prediction to churn out 34,500 tons," Timah corporate secretary Prasetyo Budi Saksono told Reuters by telephone from Jakarta.

"For 2003, we also plan to produce 40,000 tons. It's possible for prices to reach $5,000 a ton, given a rapid decline in LME stocks," he said.

Prasetyo said output had gone up because state-run Timah and another producer PT Koba Tin had to buy excess tin concentrates from local miners on the island of Bangka, off Sumatra, after the government imposed an export ban last year to quell illegal mining.

Industry sources said Timah bought the minerals from local miners to prevent social unrest in Bangka, Timah's key area of operations. Illegal mining has provided a major income for local people there.

"We have ample supply of concentrates. There's plenty of supply coming from unconventional miners," said Prasetyo, adding that Timah's refined tin output already touched 30,891 tons in January-September period of last year.

Timah shares were down 25 rupiah to 650 rupiah ($0.07) at 0624 GMT.

Traders said output cuts in other main producers China, Malaysia and Thailand started to bear fruit this year, which would boost sentiment on the LME. Falling LME stocks was also good for the market, they said.

LME tin hit $3,620 a ton last February, the lowest price since the contract was reintroduced in mid-1989, prompting producers to trim output during 2002 to stay afloat and save costs.

"China, Malaysia and Thailand are cutting down on their output. So I think we don't have to worry about Timah's rising production," one dealer said.

China, the world's largest producer, was expected to produce 60,000 tons of tin in 2003, down from 80,000 tons last year.

LME tin stocks have fallen to 23,715 tons this week from all-time high at 39,475 tons last August, which suggested that industrial demand for tin, mainly used in soldering, plating and chemicals, was recovering despite a global economic slowdown.

On the Kuala Lumpur Tin Market (KLTM), spot tin fell $125 a ton to $4,525 a ton on Tuesday. (US$1 = Rp8,883 rupiah) (*)