Indonesia's Old Mines Get Green Lease of Life

Indonesia's PT Timah, the world's largest tin miner, is driving an ambitious environmental scheme to turn thousands of acres of exhausted mines into productive green areas, a company official said on Friday.

Timah has a sprawling network of disused mines on Indonesia's main tin-producing island of Bangka, off Sumatra, where Indonesian law requires miners to return the excavations to their original state once exploration is complete.

"This is one of the responsibilities of mining companies, so the land can be used for other purposes outside mining," the firm's corporate secretary, Abrun Abubakar, told Reuters from Jakarta. "It can be for farming, housing and tourism."

Uncontrolled mining has caused environmental damage on Bangka, where small, unregulated miners have reopened acres of disused mines that had already been planted with trees.

As Indonesia battles to rein in the illegal miners, worries about the environment and the possible launch of crackdowns promise to help keep tin prices up, dealers say.

Worries about environmental damage from mining prompted Jakarta to launch a crackdown in 2006 that led to the closure of dozens of illegal smelters. The move sparked supply fears and helped push up tin prices in London to a record high.

Abubakar said Timah could spend up to 30bn rupiah, or $3.3m, this year to convert 2,000 hectares (4,942 acres) of exhausted mines on Bangka, which is also home to PT Koba Tin, Indonesia's second-largest tin miner, and 30 small smelters.

The target compares with the figure of 1,700 hectares the company reclaimed in 2007, he added.

"We've allocated 12-15m rupiah for each hectare of land," Abubakar said.

Reclamation involves shovelling earth into craters, some as big as football fields, to turn them into farms and green belts or adapt them to other uses, such as schools, he said.

"Our activity was disrupted from 2001 to 2005 when reclaimed areas were damaged by small-scale mining forays by the locals. Many trees which had been grown then fell."

After the 2006 crackdown, Indonesia introduced new regulations for tin export, and of the 30 small smelters, only 19 are licenced to export.

But the rehab effort often hits snags, as illegal miners return to mining sites, undeterred by the prospect of raids by local police, official news agency Antara reported this week.

"We reclaimed disused mines years ago and the areas had turned into forests," Suwanto, reclamation head of PT Koba Tin, told the agency. "But then people cut the trees and the land is mined again and damaged."

Koba aims to rehabilitate 4,000 hectares of disused mines in 2008, up from 600 hectares in 2007, Antara said.

LME tin hit an all time high of $25,500 a tonne in mid-May, driven by worries over supply from main producers China and Indonesia, as well as low inventories.

Timah said this month it expected first-half sales of refined tin to fall 21% to 24,000 tonnes from a year ago, thanks to tight raw material supplies.

By Lewa Pardomuan, editing by Clarence Fernandez, Reuters .