World Tin Producers Battle Glut

Illegal ore from one mine in Brazil, declining demand have knocked the bottom out of market

FIVE years ago the price of tin collapsed by half, sending shock waves around the world. From the underground tin mines in Bolivia and Cornwall, England, to the coastal deposits in Indonesia and Thailand, thousands of tin miners were thrown out of work. The outlook for tin producers is still bleak, analysts say. ``The demand for tin has constantly dropped in the last 10 years, while production has gone up,'' says Fernando Urquidi, a mining expert for the United States Department of State.

Since the 1985 crash, the Association of Tin Producing Countries (ATPC), which includes Bolivia, Malaysia, Thailand, Indonesia, Australia, Zaire, and Nigeria as members, has been trying to fix export prices.

But two of the world's largest producers, Brazil and China, who together accounted for around 40 percent of world output last year, remain outside the tin cartel. Brazil, the largest producer, was expected to join the ATPC at its October meeting in Cochabamba, Bolivia. But ATPC hopes were dashed when the government of Fernando Collor de Mello said that it needed more time to clamp down on illegal tin production, estimated at 12,000 tons last year. Illegal production

Most of Brazil's illegal tin comes from one mine at Bom Futuro (``Good Future''), a sprawling deposit in the northwestern state of Rondonia, bordering Bolivia. Found in 1987, Bom Futuro's fabulous wealth attracted thousands of poor wildcat miners known as garimpeiros.

Official Brazilian reports say 6,000 tons of tin left Bom Futuro last year. The garimpeiros reportedly trade their tin with Bolivian smugglers, often swapping the tin ore for gold or cocaine.

Illegal output at Bom Futuro catapulted Brazil into first place in the world tin league. But garimpeiro production was also responsible for a rapid buildup in world stocks to 45,000 tons, which again depressed prices.

Brazil has agreed to try to reduce production by 6 percent, to 39,000 tons, next year, the same percentage cut as other ATPC countries.

But observers doubt the Collor government will risk confrontation with the garimpeiros. ``I'm not saying Brazil is acting in bad faith, but I doubt it has the capacity or political decision to control the garimpeiros,'' says Alfredo Rojas, president of the Bolivian private miners association.

Overproduction by Brazil is not the only stumbling block the ATPC faces. Mining experts say the 6 percent cut is not enough to raise prices. ``We needed a cut of at least 14 percent to make any significant impact on prices,'' says Mr. Rojas. ``The days of underground mining in high-cost countries like Bolivia are'' ending.

ATPC countries blame the Bush administration for some of tin's current problems. The US Defense Logistics Agency recently decided to put on the market 7,000 tons of its 160,000-ton strategic stockpile. The ATPC says the sale of the tin will undermine its efforts to reduce world stocks and further depress prices. Angry reaction

``The US is supposed to help developing countries,'' complains Redzwan Sumun, the ATPC's executive secretary. ``They don't need to sell so much tin - 4,500 tons would be enough.''

Observers suspect the Bush free-market ideology lies behind the decision. ``The US is totally opposed to what it regards as a cartel, and could launch any amount of tin onto the market at any time,'' comments one North American expert.

But tin producers are faced with a more difficult challenge - how to halt declining consumption. World demand has slumped from a peak of 200,000 tons in the mid-1970s to a predicted 183,000 tons next year.

Tin plate used in cans accounts for 30 percent of world tin consumption, down from 45 percent in the postwar years, with the switch to aluminum. Plastic packaging has further undermined tin's appeal.

The future employment of thousands of tin miners across the world could depend on who can win the recycling war.

The aluminum industry has spent millions of dollars to stress the recyclability of aluminum. But the London-based International Tin Research Institute, funded by the ATPC, says the trend to aluminum has been reversed. ``Tin plate is beginning to exploit its recycling advantages - particularly its ability to be extracted magnetically from domestic refuse,'' the institute says.

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