Governor Eko Maulana Ali is quoted saying:

“Traditional Tin mining has been expanding. Farmers and fishermen have now switched to mine Tin.”

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One of the dealers is quoted saying:

“The market was traded mostly lower this week, so we expect to see more buying support next week as prices are still low.”

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President Director Wachid Usman is quoted saying:

“We’re competing with illegal miners that operate near and within our mining areas.”

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Tin may recover quickly if Chinese demand picks up

Sydney-based Resource Capital Research has hit a gold mine, with their comments: “We think tin will be one of the first metals to recover once markets stabilise.” Don’t disregard the comment. Resource Capital Research (RCR) does have a point.

Unlike most of the other base metals, there is no growing tin surplus. Inventories held at the London Metal Exchange now sit at 8,820 tonnes, against a 52-week high of 11,430 tonnes. The RCR case is that a rebound in Chinese demand, coupled with the closing of mines in Indonesia, could trigger supply shortages.

So, there you have it. Shortages portend high prices. The future points to strong demand and short supplies. Copper, and lead have potential as well. It is time to pull down the hatch and adopt a wait-and-watch policy.

Even dealers said the tin market would keep an eye on supplies from Indonesia after China slapped a 10 per cent duty on exports of primary refined tin from January 1 — a move aimed at discouraging exports and ensuring local supplies. Tin is used in electrical solders and as a corrosion-resistant coating for other metals.

“The development in China is supporting the price. We don’t expect anything to come out of China, which means if something happens in Indonesia, it will affect prices,” said a dealer in Malaysia’s northern state of Penang. “There’s a chance tin will revisit the highs,” he said.

Incidentally, the various Australian stock exchanges that have been home to many tin companies over the years, are now gaining critical mass. There are around 15 companies that have a substantial tin interest. The biggest player is Metals X (MLX) with its Renison mine. Gippsland (GIP) has advanced to a bankable feasibility study at its Egyptian tantalum-tin project. North Queensland Metals (NQM) has gold revenue to finance its tin projects, while those classed as in the advanced exploration stage by RCR are Consolidated Tin Mines (CSD), Kasbah Resources (KAS) (with a potentially world-class deposit in Morocco), Venture Minerals (VMS) (with Australia’s third largest resource in Tasmania) and China-controlled YTC Resources (YTC).

It may be noted that that during the past 12 months, the listed companies on the ASX with tin projects have regained considerably from their share price lows, one of the best performers being Stonehenge Metals (SHE), along with Macquarie Harbour Mining (MHM) and Malachite Resources (MAR). For the record, the other tin plays are Minemakers (MAK), Wolf Minerals (WLF) and Auzex Resources (AZK).

Mincor Resources (MCR), which engages in the mining and exploration of mineral resources in Australia, owns and operates four nickel mines: Miitel, Redross, Mariners, and Wannaway in the Kambalda Nickel District of western Australia. Mincor Resources also holds a 100 per cent interest in the Gascoyne Tungsten prospect, Tottenham Copper prospect, Widgiemooltha Gold prospect, and Lake Cowan Gold prospect.

Shares in Mincor Resources have risen as the nickel miner committed to a dividend payout despite posting its first ever loss in eight years. In its interim report released on Wednesday, Mincor reported a net loss of $22.7 million for the six months to December 31, 2008. Mincor said the loss includes a provisional pricing adjustment charge of $9.3 million, a one-off impairment charge of $17.3 million and $6.7 million in exploration costs.

Revenue for the period dropped from $164.87 million, reached in the prior corresponding period, to $100.39 million on the back of a sharp fall in the nickel price. Over six months, the average nickel price dropped from $14.05 per pound to $7.99/lb. Funnily enough, Mincor was upbeat about the results, saying the net loss comes despite record production and “best cost performance” in more than two years.

Not a firm to be beaten. What also buyoed sentiment, was that despite the head of Indonesia’s second-biggest tin smelter, PT Koba Tin, being detained for alleged illegal mining, the production process and exports remain unaffected. Kamardin Md Top, the president director of Koba Tin, has been detained since February 16 for mining in a protected forest area, and is being held at Bukit Semut prison on Bangka island for further investigation.

The detention is the latest twist in a long-running series of investigations by the authorities in Indonesia’s main tin-producing islands, source of nearly a quarter of the world’s tin. While the saga disrupted output in early 2007 and continues to worry markets, it hasn’t affected output. “Shipments are not affected,” Koba Tin director Darmansyah Nawawi told Reuters. “That means all things are running as planned and approved by the government”.

The crack down on tin mining on the islands comes amid growing pressure to protect Indonesia’s environment and forests, which are being destroyed by illegal logging, mining, and the rapid expansion of plantations firms, as well as a concerted national campaign to stamp out corruption.

Exports Down

Indonesia’s refined tin exports fell nearly 38 per cent from the same period a year ago, trade ministry data showed. Indonesia exported an estimated 6,185.74 tonnes of refined tin in January, down from 9,914.40 tonnes of refined tin in the same month a year ago. But the volume was nearly double that in December, when 3,805.50 tonnes were exported. “Exports fall because of slowing demand from overseas buyers and low tin prices,’ said an official at the trade ministry. A drop in tin prices has cut margins for small smelters and prompted them to temporarily suspend operation since October. The price of tin, which is also used in food-packaging, has fallen nearly 57 per cent from an all-time high of $25,500 a tonne hit in May 2008, reflecting the impact of the global economic crisis.

Company News

Silver Standard Resources Inc. (TSX:SSO) has announced its wholly-owned Pirquitas Mine in Jujuy, Argentina, is on schedule to commence concentrate production in the current quarter. Initial production will focus on the processing of over 400,000 tonnes of run-of-mine grade jig tails from historic operations and then transition to material from the open pit. To date, approximately five million tonnes of material has been moved from the Pirquitas open pit and stockpiling of ore has commenced.

At current metal prices, the silver and tin concentrates account for over 95 per cent of the anticipated revenue from the mine. As a result, the silver circuit will be optimized first, followed by the tin circuit. A decision to complete the zinc circuit is dependent on the results of metallurgical testwork to be received on increasing silver recoveries. With production ramping up through Q2, Pirquitas is expected to produce in excess of six million ounces of silver in 2009 with full production in excess of 10 million ounces in 2010.

China has been bailing out its struggling domestic smelters by stockpiling metals since December. Heralding the Chinese New Year, wherein most companies and projects run overtime during the Spring Festival in order to ensure annual production plan, several firms have decided to take the long road.

Hainan Haiyu Tin Plate Industrial Co Ltd plans to churn out the first piece of tin sheet by June from its new 0.2 million tonnes per year tin plate line, whose construction is close to the end. Then, Hainan will grow to be the second tin plate production base after Shanghai in China. The relevant official of the tin plate producer said, “We didn’t stop production lines in the festival holiday for the sake of completing the new project and putting it into production on time.”

In addition, Hai Mining United Co Ltd uncovered its new target to double its yearly output of finished iron ore to 6 million tonnes in three years and double its annual revenue to CNY 4 billion. The company started normal production since the third day of Chinese Lunar New Year to strive for the targets and stable financial growth.

Last week, the China stock market finished higher from the previous week’s holiday for the Chinese New Year, adding more than 3 per cent in the process. However, Chinese shares fell Thursday, snapping a three-day rally that had been spurred by reports suggesting a nascent economic recovery, with banks and textiles dropping while steel stocks rose on lower ore prices. Nonferrous metals producers fell after rising earlier in the week.

Jiangxi Copper Ltd., China’s second largest metal producer, was off 2 per cent to 13.84 yuan. Yunnan Tin Ltd. slumped 4.1 per cent to 13.33 yuan. Steel makers bucked the downward trend however, according to an AP report, on news that ore prices fell, which would boost their profits. Baoshan Iron & Steel Ltd., China’s biggest steel maker, added 1.1 per cent to 5.66 yuan, while Liuzhou Iron & Steel Co. gained 3.6 per cent to 4.01 yuan.

Crisis ridden

The global financial crisis and sharp falls in metals prices have forced several companies to abandon or put on hold their plans to bring new mines on stream. Some existing producers also have shut down or curtailed output at mines and plants as high costs and low prices bite.

Anglo American Plc (AAL.L) said it has temporarily halted production at Loma nickel  mine in Venezuela, partly due to high transport costs.

Albidon (ALDq.L) said nickel output for the December 2008 quarter had fallen and lowered its production forecasts.

Saudia Arabian Mining Co Maaden said it would delay by three years the start of production at a planned aluminum smelter after Rio Tinto Alcan abandoned the project.

BHP Billiton Ltd (BLT.L) may be about to close the Ravensthorpe nickel mine in Australia and probably has already trimmed output of most other commodities, with the exception of oil and iron ore.

Good tidings

Amidst all the gloom, there is some good news. Cadillac Ventures Inc. (CNSX:CDC) has announced $2.3 million financing. The firm, which is a development focused exploration company which, in addition to the Matsa Huelva joint venture, has two Canadian exploration projects, located in regions that have been historically active, has entered into an agreement with Trafigura Beheer B V, an existing shareholder of the company, for a non-brokered private placement financing pursuant to which it will issue units for the gross proceeds of $2.3 million. The proceeds from the financing will be used for exploration expenditures and general working capital purposes.

The prime assets of Gippsland Limited (ASX/AIM GIP) are the world-scale 44.5 million tonne Abu Dabbab and the 98 million tonne Nuweibi tantalum deposits located in Egypt. The company is scheduled to produce 650,000 pounds of tantalum pentoxide, plus 1,530 tonnes of LME grade tin metal per year. The Abu Dabbab project alone is expected to have a mine life of 20 years, however, given that Gippsland’s total JORC Code Resources exceed 140 million tonnes, the company will look to increase tantalum and tin production substantially following commencement of operations.

A scoping study in relation to an extensive alluvial tin deposit contained within the 20km exploitation licences covering the 44.5 million tonne Abu Dabbab tantalum-tin-feldspar project was completed during December. The Company has estimated an inferred resource of 438,000m of alluvium containing in excess of 760 tonnes of recoverable tin metal within the alluvial tin deposits explored. The directors of the firm are confident that additional resources of alluvial tin will be delineated within the exploitation licences, as the previous exploration work utilised the same high tin cut-off grade, effectively excluding large quantities of the overlying tin-bearing alluvium. These areas are currently being evaluated as part of the company’s continuing tin exploration programme within the region.

Based upon the present tin price of US$11,500 per tonne, the scoping study indicated that the alluvial tin has the potential to generate additional US$8.7 million revenue during the one year it will take to process the material.

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By Melissa Pistilli-Exclusive to Tin Investing News

Tin was the only base metal in positive territory last week.

The price of tin could continue to hold firm since cutbacks in the market have been more extreme than for other metals and tin stocks remain low, said Stephen Briggs, analyst at RBS Global Banking & Markets.

The price of tin on the London Metals Exchange (LME) was given a nearly 6 per cent boost last week from China’s Yunnan province’s announcement that it would spend about $3 million on building a 100,000 tonne stockpile of refined tin, ore and semi-finished products. The tin stockpile is a part of a wider base metals stockpile plan meant to help support local metals smelters.

The province’s plan is to build up a one million tonne reserve of base metals that will be financed by bank loans secured on the local smelters’ metal stocks. The Yunnan government expects metal smelters to obtain bank loans to finance the purchases, and then the government will subsidize the interest. The reserve stockpiling is scheduled to run from this month until the end of next year.

Yunnan Tin halts production

Despite the province’s plan to convince smelters not to curtail production and maintain jobs, Yunnan Tin, the nation’s top tin producer, has decided to halt production. “Prices have been below our production costs,” said a director at Yunnan Tin’s trade department. “We also do not have enough concentrates and we only have one furnace. We have to close it completely, which we did on December 8.”

 Yunnan Tin is considering reopening their smelting facility after February if the company has sold some of its tin to the province’s stock-piling plan.

 Stockpiling plan criticized

Yunnan Province’s plan has garnered some criticism from financial and metals analysts. It seems “the markets have adopted a wait-and-see posture with respect to China’s ability to stoke commodity demand,” said The Motley Fool’s Christopher Barker.

“The numbers look too large to be realistic,” said Leon Westgate, Standard Bank analyst. “There may be some confusion over whether they are talking about metal in concentrates or total concentrates.”

Director at Yunnan Tin has said that the plan’s quota for metals “will not necessarily be filled” because the overall volume will depend on the take-up by smelters. The director also added that Yunnan Tin has not yet decided how much tin it will sell to the government’s plan as it needs metal for term clients as well.

Other analysts are questioning the Yunnan government’s methods for setting the loan targets for local banks. A Yunnan Economic Committee official said the loans to smelters would be an investment by banks, but analysts believe the plan may not be of much help to smelters given the surplus of base metals in the market.

 ”This won’t make any difference to the problem of oversupply in commodity markets. The metal will sit there in smelters’ yards, it won’t go into consumption and it won’t deter production,” an anonymous commodities analyst told Reuters.

However, Barker believes “that the broader significance of this announcement has been widely overlooked.” The proposed 100,000 tonne tin purchase outlined in the plan represents a full year’s production in China. “Where metals analysts perceive a gesture that’s unlikely to reach fruition, I see a country moving to maintain productive capacity, to fuel the impending infrastructure build-out of a $586 billion stimulus plan,” he said.

 Although some doom and gloom analysts may view the plan as a “bailout for a foundering industry,” Barker sees a country “prudently amassing resources at unexpectedly low prices in order to enhance the efficiency of its infrastructure expenditures.”

Barker says China is smartly “acquiring hard assets to help offset its world-leading exposure to the rapidly accelerating debt of the United States.” He gives a positive forecast that further purchases are likely, which will have a long-lasting impact on base metal prices.

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The world’s leading tin miner, PT Timah has announced it may restrict refined tin production and instead ramp up output of higher grade tin-based products such as tin chemical and tin solder in an attempt to counteract falling prices.

“If prices are still lower next year, we may limit refined tin output and push for more high-priced by-products,” said company spokesman Abrun Abubakar. “It’s useless to flush the market with refined tin.”

Because of plunging prices, PT Timah expects tin output to remain flat throughout next year. The company anticipates between 45,000 and 48,000 tonnes of refined tin production this year, slightly below their initial target of 50,000 tonnes and significantly down from last year’s 58,325 tonnes.

The planned cutbacks in production are an attempt to stabilize prices in the tin market. “We expect tin prices won’t fall further. If they can stay at $15,000 that is good,” said PT Timah finance director Krishna Syarif.

PT Timah’s production curbs are representative of a growing trend in Indonesia, the world’s second largest tin producing country (25% of global production) and home to some the largest deposits of tin on earth. Tin smelters across the nation are halting production.

The Indonesian government’s crackdown on illegal tin mining has already heavily impacted the nation’s tin industry. The government imposed regulations coupled with significant decreases in production will no doubt help to place much needed upward pressure on tin prices.

Tin Price to Recover?

In May of this year, global tin prices reached a record high $25,500 before falling victim to the current worldwide economic crisis. On Tuesday, tin on the London Metal Exchange was quoted at $12,650 per tonne. The tin price is forecasted to remain under pressure and uncertain as the markets remain volatile. Movements in price will most likely reflect global commodity and US dollar movements.

Many remain confident that China, whose economic growth was greatly responsible for driving commodity prices over the last few years, will bounce back from the current economic crisis. “China’s resurgent demand for raw materials is already surprising the market,” said Diggers and Drillers editor Al Robinson. “It reverted to ‘net importer’ status in all base metals for October, according to the London Metal Exchange. China already needs more resources than it can get its hands on.”

Some analysts are certain that the actions taken by central banks around the world are beginning to produce movement in global capital, which may be seen as a sign that commodity prices are beginning to bottom. This could be the start of bargain hunting in the resource sector, especially for mining shares.

Metals X Limited

Australian miner Metals X Limited [ASX:MLX] is bound to catch the eye of many a bargain-hunting investor. The company is Australia’s largest tin producer and has a portfolio consisting of nickel, zinc, copper, gold and uranium as well. Metals X’s tin properties are some of Australia’s largest and best known hard-rock tin mines and prospects.

Metals X reported a cash position of $25.4 million for the third quarter ending September 30, as well as a net working capital position of $21.7 million and no corporate debt. Due to current market conditions, Metals X is refocusing its efforts on its revenue producing assets and preserving its cash reserves. The company’s tin projects include: Collingwood, Renison, Mt. Bischoff and Rentails.

The Collingwood Tin Project is wholly owned by Metals X and is the largest tin producing operation in Australia with production rates around 5,700 tonnes of 60% grade tin concentrate a year. Concentrate product from Collingwood is shipped to Malaysia for refining and smelting. The finished product is then sold on the Kuala Lumpur Metal Exchange.

The Renison Tin Project includes the historic Renison Bell Mine and process plant, which in the past produced over 200,000 tonnes of tin. Metals X acquired the property in March of 2004. In the third quarter of this year, commissioning of the Renison plant was completed and commercial tin production commenced. The company expects to reach full capacity by the end of this year. Renison is currently generating regular cash flow and Metals X expects the project will reach a cash positive position in the fourth quarter.

Metals X plans to incorporate the Mt. Bischoff property into the Renison Project to provide ore feed to the Renison Tin Concentrator. The property has a moderately sized open pit resource and the potential for further tin discovery and mining. Metals X is awaiting statutory approvals in order to begin mining on the property.

The Rentails project involves re-processing and recovery of tin and copper from 18.2 million tonnes of tailings left over from tin ores processed at the historic Renison Bell mine. The tailings have an average grade of 0.42% Tin and 0.20% copper.

“With shortages of tin stocks and China becoming a net importer of tin and Indonesian tin output falling, tin prices should recover despite weaker demand in the short term,” said Proactive Investors Australia director Andrew McCrea. “MLX’s share price is leveraged to changes in the price of tin.  Trading near a three year low, MLX could be a good upside bet at current prices.”

Shares of Metals X Limited were at .09c on the ASX Tuesday, down from a 52-week high of .48c.<–>

Although the short-term outlook for tin and other industrial use metals is understandably bleak at the moment, the long-term projections for the dull base metal show is that it is likely to outshine the majority of its commodity cousins once the current crisis abates.

In their recent report entitled “Tin: A Global Strategic Business Report”, Global Industry Analysts Inc. has said the global tin market would reach 516.9 thousand metric tons by 2012. As more and more become aware of lead’s dangerous toxicity, it is expected that tin demand growth will substantially increase in the coming years as the world transitions from lead to tin-based solders.

Tin is already quickly becoming “the metal of choice” for electronics soldering, which represents the largest and fastest growing market for tin, following the 2006 implementation of European Union regulations that now require the use of lead-free solders.  Tin made up 50 per cent of solders in 2006 and 52 per cent in 2007.

The case for the tin bull was alive and well at the New York Stock Exchange during last week’s Inside Commodities conference. However, it is not just the strong demand fundamentals that have so many people “bullish” on tin. “It’s a matter of supply”, says CPM Group analyst Catherine Virga, who presided on the conference’s base metals panel.

It seems action taken by China and Indonesia – both nations accounted for 70 per cent of global mined tin in 2007 – is beginning to take a toll on tin’s long-term supply outlook.  China’s top three tin producers - Yunnan Tin (world’s biggest tin producer), Yunnan Chengfeng Nonferrous Metals, and Liuzhou China Tin – are all significantly reducing output in reaction to lower prices brought on by the current global downturn.

In Indonesia, the story is the same. Although the government has begun reissuing permits after its 2006 crackdown on tin producers, production has yet to return to previous levels, said Virga.

Yet, like their Chinese counterparts, Indonesian producers have implemented their own production cutbacks. The Indonesian government is also considering placing further caps on tin production for 2009 in an effort to control further price drops.  A smart move given that “with the current gloomy economic picture, only production cutbacks can help base metals gain some support,” say analysts at Angel Commodities.

Declining output from the top two producing nations has shifted the focus of the tin market to other parts of the globe, namely the Democratic Republic of the Congo. “The Congolese government had planned a ban on exports of tin in certain provinces in 2009 as a way to encourage the further refinement of tin in the Congo,” said Virga. “This would have allowed them to benefit from the higher prices for refined exports.”

Unfortunately, the country’s tin-producing provinces are at the centre of a contentious civil war that has escalated out of control despite the efforts of the DRC government and UN Peacekeepers.  The armed conflict has had a “disproportionately large effect on tin prices as international buyers increasingly rely on the relatively small producer,” reports Reuters.

Despite market expectations that demand growth for tin will likely be less than 1per cent, Virga asserts the supply side will remain in deficit as it has been since 2006.  How will this play out in terms of tin price? “No large surge in price is expected anytime soon because of the economy,” Virga points out. However, for the long-term investor the supply/demand outlook does present an interesting opportunity.

Currently, Tin has “an extremely rare fundamentals position: dwindling supply, steady-state demand and an extremely suppressed price,” notes Hardassetsinvesting.com. These fundamentals place tin in a favorable position for a price hike once the global economy starts to recover.