State mining company PT Timah, the country's largest tin exporter, will purchase four vessels this year representing a total investment of Rp 230 billion (US$21.3 million), aimed at supporting its planned expansion in offshore exploration.

Timah president director Wachid Usman said on Monday the offshore expansion would account for around 50 percent of the company's output this year, from the current 30 percent.

Indonesia, the world's second-largest tin producer after China, has vast tin reserves in its territorial area, with those located offshore still untapped.

Timah would allocate Rp 200 billion for buying a big vessel and some Rp 30 billion for the smaller ones.

Wachid said the vessels would be used to carry the minerals to onshore processing plant. However, Wachid did not mention the source of the funds for the purchase.

Timah plans to maintain production target similar to last year at around 60,000 tons.

"The production this year will be more or less the same as last year," he said.

However, as of third quarter of 2008, Timah produced 38,585 tons, or 24 percent lower than the 2007 level. During the same period, Timah posted an 18 percent jump in net profits to Rp 1.49 trillion from Rp 1.26 trillion.

Due to the decline in global tin prices, the government has announced that national tin output might decline by 13 percent to 79,210 in 2008 tons from 91,280 tons in 2007.

Tin prices have declined by more than 40 percent last year on the back of slower demand.

Director general of minerals, geothermal and coal Bambang Setiawan said, as quoted by Bloomberg, that the country might set a tin production quota of less than 80,000 tons this year.

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