Smuggling Is a Threat to Fragile Tin Market

Drugs and gold are the common smuggling images in Southeast Asia, but the underground trade in tin is on the rise and now endangers the stability of the fragile world market.

Malaysia, Indonesia and Thailand, which together produce most of the world’s tin, have been hard hit by the smuggling, which has increased substantially in the last five years.

The London-based International Tin Council (ITC), an association of producers and consumers, has warned that continued massive smuggling could lead to a market collapse.

Operated by Syndicates

But there seems little chance of stopping the illicit trade, operated by regional syndicates and small traders. Almost all smuggled tin finds its outlet in Singapore.

The smugglers have devised ingenious methods to transport ore and semi-refined tin across borders into Singapore, where it is processed and re-exported with little official hindrance. Singapore does not produce tin.

Hidden in secret compartments of private cars, trucks and motorcycles, tin is sneaked into Singapore from neighboring Malaysia, the world’s leading tin producer.

Tin ore is buried under ice aboard fishing trawlers by smugglers in Thailand and Indonesia. Another favorite method is to suspend big bags of tin concentrates from the hulls of ships.

A Thai Interior Ministry official, Anant Anantakul, resigned recently from a committee coordinating Thai government action against tin smuggling in a gesture of frustration.

He told reporters that corrupt government officials connived with smugglers by turning a blind eye to their operations.

Large-Scale Operation

Officials in tin producing countries cite ITC quotas, export restrictions, and high production and other business taxes for the large-scale smuggling of the metal in the region.

An adviser to the Thai private mining council, Darm Tiewthong, has proposed that Thailand should quit the ITC to free itself of quota restrictions. He estimated the amount of smuggled tin concentrates might almost match legitimate exports.

ITC officials say the amount of smuggled tin is still far below the ITC quotas, which total 22,000 tons a quarter--Malaysia 9,128 tons, Thailand 4,530 and Indonesia 5,526.

The ITC estimated that about 12,000 tons of metal were smuggled through Singapore last year.

The ITC buffer stock manager has been trying to prop up the price structure for the past few years, but the price is still on the decline, an Indonesian tin expert said.

The price of the smuggled tin varies but Malaysian officials said it was generally up to 50% of the market value, currently $13.31 a kilo.

International Concern

Despite international concern and appeals from neighboring countries, Singapore has refused to close down its only private tin smelter, Kimetal Private Limited.

Singapore’s exports of refined tin, including legal transshipments, totaled 20,800 tons in 1983, compared to 18,000 the previous year, according to the latest figures.

A spokesman for the Ministry of Trade and Industry told Reuters that the government could not close down the smelter because Singapore is a free port.

Kimetal, set up here in 1977, had a turnover of $94.8 million last year, compared to $23.7 million five years ago.

Official statistics show that Singapore’s main tin export markets are the Netherlands, Spain, South Korea, the Soviet Union and the United States.