T

he Energy and Mineral Resources Ministry said “irregularities” were to blame for Indonesia’s failure to reach its tin production target of 90,000 tons last year, a senior official says.

The ministry’s director general for minerals and coal, Bambang Setiawan, said that logically, with the current soaring global tin price, the country’s production should have at least reached or even surpassed the target.

“I assume there are incidents of smuggling. I have no evidence for this, but there are indications leading to that conclusion,” he said on the sidelines of a meeting at the ministry Thursday.

The ministry said that in 2010, the country produced 78,965 tons of tin, 12 percent below the ministry’s target.

The global price of tin increased sharply in the past two years. In 2009, the price for the commidity at the London Metal Exchange (LME) was between US$10,000 and $16,000 per ton. In 2010, the price shot to post-2008 record levels at between $16,000 and $26,000 per ton. Between Nov. 29 and Dec. 29, the average price for tin was $26,362 per ton.

“Given the high price, miners should have increased production, but they didn’t,” Bambang said.

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However, if there was no significant expansion of mining sites, the drop in production is suspicious.

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A 2009 Trade Ministry regulation on mineral and coal mining stipulated that miners were prohibited from exporting tin ore. The ore had to be processed domestically before being sold at both domestic and international markets.

Bambang said all tin ore should be processed at smelters first, where production would be recorded by the ministry.

“Illegal miners usually sell the tin ore on the black market,” he said.

Indonesian Mining Association chairman Priyo Pribadi said most miners usually boosted production when prices surged to maximize profit. He said production may have dropped as firms opened new mines.

“However, if there was no significant expansion of mining sites, the drop in production is suspicious,” he said via telephone.

Priyo added that the soaring tin price could spark smuggling practices. To counter the problem, he called on the government to work with law enforcement officials to tighten supervision.

State-owned tin producer PT Timah corporate secretary Abrun Abubakar denied allegations that the decline in production was irregular. He blamed it on inclement weather.

“A longer rainy season and strong winds caused a decline in tin production last year. There was nothing fishy,” he said in a text message.

However, he acknowledged that the growing number of illegal miners collecting tin ore surrounding Timah’s properties affected the company’s production. He promised that the company would take measures to overcome the problem.

Timah produced 39,000 tons of tin in 2010, around 50 percent of the country’s total production.

This year, the firm expects to raise production by 28 percent to 50,000 tons.

—JP/Rangga D. Fadillah