By Melissa Pistilli – Exclusive to Tin Investing News

Exports of cassiterite, the chief tin ore mined in the Democratic Republic of Congo, will resume on Monday.

For the past few weeks, dealers in the province of North Kivu and the Congolese government officials had been in talks over an export tax increase that had led to a seven-week strike.

“The strike is over. From Monday, we will start exporting,” announced John Kanyoni, President of the Association of Exporters of Minerals, North Kivu.

A majority of DR Congo’s tin ore is mined in North Kivu and its capital, Goma. It is the main export point for ore mined from both North and South Kivu. A total 80 per cent of the nation’s tin exports come from the two adjoining provinces.

In early July, the Congolese customs agency, Ofida, more than tripled the reference price used to calculate export taxes, which led to the export strike and resulted in 2,500 tonnes of ore overflowing Goma’s warehouses.

In early August, the Association of Exporters of Minerals in North Kivu had asked the government to base the tax on the London Metals Exchange (LME) market price, rather than a fixed rate. Government officials have agreed. Both, the Ministers of Finance so also Mines have signed the decree to set the new tax rate.

“The final deal is 5 per cent of the London Metal Exchange quote, deducting the treatment charge which includes insurance, transport and everything else,” said Kanyoni. “The treatment charge is roughly US$1,400 per metric tonne.” Tax calculations will be based on contained tin metal in each ore shipment and depend on the purity.

North and South Kivu: Rebel hostilities

The tax imposed by Ofida was yet another attempt by the Congolese government to reign in corruption in the tin sector of North Kivu and South Kivu. Officials report that although the two provinces had exported approximately 12,000 tonnes of ore in 2006, less than half it was declared to mining authorities.

Both provinces lie in DR Congo’s eastern borderlands where several rebel fiefdoms and militia controlled zones exist even though the five-year civil war officially ended in 2003. This year, the United Nations discovered that these armed groups were smuggling tin ore and extorting illegal levies from mining operations in order to purchase weapons.

Illegal mining in Indonesia

Officials in Indonesia, the world’s second-biggest tin producer, are trying to control their own illegal tin mining problem. “What we are tackling first is the illegal mining because we are afraid it will cause oversupply in the market and push down the price of tin,” said Energy and Mining Minister Purnomo Yusgiantoro. In recent years, illegal tin mining on the island of Bangka, off Sumatra, has led to environmental damage and oversupply that has led to drops in tin prices.

However, the Indonesian government’s crackdown on illegal mining caused tin prices on the LME to soar in May to a record high of US$25,500/tonne over supply concerns. Tin has been this year’s best LME metals performer gaining 25 per cent. Tuesday, tin prices closed at $20,550/tonne.

Chinese tin imports increase

Rising demand from Asia has led tin futures prices on the LME to nearly triple since 2006; prices have, however, fallen in recent months over concerns of the global economy slowing down.

China’s refined tin imports for July (941 tonnes) increased 20 per cent from the same period last year. Exports for the same month dropped to zero. Imports of tin concentrates (683 tonnes) for July have more than doubled.

Refined tin imports for January to July 2008 have increased 58 per cent (year on year) to 8,109 tonnes. Indonesian and Bolivia are China’s main sources for refined tin imports. Indonesian imports are up 90 per cent to 2,852 tonnes. For the same period last year, not a single ounce of refined tin ore came from Bolivia. This year, China imported 1,585 tonnes from Bolivia. Concentrate imports (4,858 tonnes) have increased 74 per cent, of which nearly half is low grade material from Vietnam.

Between January to July, refined tin export was 386 tonnes. It is suspected, however, that this may be due to the 10 per cent export duty that came in to effect early in the year. Exporters may be passing off significantly larger quantities of refine tin as other tin products in order to avoid the export duty.

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