Thursday, 19 February 2009

Indonesia Koba Tin exec held, no impact on output

Tue Feb 17, 2009

By Dwi Sadmoko

PANGKAL PINANG, Indonesia, Feb 17 (Reuters) - The head of Indonesia's second-biggest tin smelter, PT Koba Tin, has been detained for alleged illegal mining, the prosecutors office on the tin-producing islands of Bangka-Belitung said on Tuesday.

Kamardin Md Top, the president director of Koba Tin, has been detained since Feb. 16 for mining in a protected forest area, and is being held at Bukit Semut prison on Bangka island for further investigation, Eko Susilo Hadi, a deputy at the Bangka-Belitung prosecutors office, told reporters.

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.

"The production process, shipments, and exports are not affected by the detention of the president director of PT Koba Tin," 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.

"Kamardin has been declared as a suspect and he was handed over to the prosecutors to be charged," Hadi, from the prosecutors office, told reporters.

"Suspect Kamardin has conducted crimes related to forestry. In this case, he has conducted mining activities in the protected forest area which is banned for exploration," Hadi said.

Under Indonesia's forestry law, the executive faces a maximum sentence of 10 years and a fine for 5 billion rupiah ($421,900) if found guilty of conducting illegal mining in Lubuk Besar village, Central Bangka regency, Hadi said.

Over the past year, Koba Tin has been investigated for alleged illegal tin mining in the islands.


Indonesian President, Susilo Bambang Yudhoyono was elected in 2004 on promises to cut widespread graft, a major deterrent to foreign investment, and with elections this year he will face scrutiny over his track record.

In many parts of Indonesia, decentralisation, which gives greater power to the local governments, has led to confusion over which areas can be mined.

In the case of tin production, the government has tried to clamp down on illegal mining in some areas to strengthen its control over supplies and prices. Last year, the government said it would cap tin production at 100,000 tonnes for 2009 in order to reduce environmental damage and prolong the life of its tin mines, with 90 percent of that earmarked for the Bangka-Belitung islands.

But only last month, the government said tin output would be capped at less than that level as lower demand had led to a drop in tin prices.

Koba Tin's Darmansyah said exports in February are seen at 480 tonnes, compared with 650 tonnes in January. Full-year exports are expected to be unchanged from last year, when they amounted to 10,000 tonnes, he added.

Koba Tin normally exports all of its output to its Malaysian parent, Malaysian Smelting Corp Bhd (MSCB.KL: Quote, Profile, Research), which owns 75 percent of the firm. Indonesia's state-owned PT Timah (TINS.JK: Quote, Profile, Research) owns the remaining 25 percent of Koba Tin. ($1=11,850 Rupiah) (Additional reporting by Telly Nathalia and Aloysius Bhui in Jakarta; Editing by Sara Webb)