It sounds like the plot of a James Bond movie. Indonesian men and children using the cover of night to man wooden rafts and transport black sand from the island bays of Bangka and Belitung, transporting tin from abandoned mines.
Except it is reality, not fiction, and neither Roger Moore or Pierce Brosnan is there to save the day. It is dangerous and it is illegal, and is further undermining global tin prices.
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Bangka and Belitung produce more than 90 percent of the tin in Indonesia, a region that also happens to be the world’s biggest exporter of the metal, according to Bloomberg News. While many of the major licensed and sanctioned mining companies in the area, such as PT Timah, are abandoning once fruitful mines, the illegal operations that have replaced them are doing so without taxation.
This is a huge issue as Indonesia can now no longer effectively tax one of its major export industries, which also happens to be a metal that is suffering from downtrodden global prices. Couple that with falling demand in China and increased supply from Myanmar mines, and we have tin prices dropping by more than a third in the past year and losing more than half its value since its 2011 peak, according to the news source.
Illegal activity undermining new regulations
We reported last month that tin prices had been holding up surprisingly well compared to other base metals, due in part to Indonesia’s new regulations to only allow refined products from legal mines to leave the country. However, it appears the illegal mining, done by whom Bloomberg News refers to as “vampire miners,” are starting to make their presence felt. It will be interesting to see the actions Indonesia takes to curb the activity in the coming months.
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