Timah says electronics solder demand may keep tin mines open

State-owned PT Timah Tbk, the world's biggest tin producer, said Tuesday it may be able to go on mining for another decade because of rising demand for the metal in solders used by companies including Dell Inc. and Sony Corp.

Tin prices have climbed two-thirds in the past year to more than $8,800 a metric ton on the London Metal Exchange (LME). A drop back to the four-year average would prevent Timah from digging mines to feed its smelter on Bangka Island in southern of Sumatra.

?We need to dig deeper to get to lower-grade ore, which involves greater equipment and energy costs," Timah president Thobrani Alwi said in an interview with Bloomberg in London. "At less than $5,000 a ton, we cannot do the business."

Timah said in 2003 it would close in five years because of slumping tin prices and profit. The European Union has since banned the use of lead in solders starting in 2006, driving up demand for tin from electronics manufacturers such as Matsushita Corp., the maker Panasonic televisions and stereos.

"The supply and demand for tin is stronger than it is for all the base metals," Peter Kettle, an analyst at industry consultant CRU International, said by telephone in London.

Inventories at LME-monitored warehouses have plunged 70 percent this year to 4,370 tons, too little to cover a production shortfall estimated by Kettle at 8,000 tons. He forecast prices will average $9,000 a ton in 2005.

"I hope that prices will stabilize at $8,000 to $9,000," said Alwi, 53, who began his career at Timah 25 years ago as supervisor of a mine on Kundur Island in Riau province. "At these prices, you can make a lot of money." (*)