Brazil Producer Says Tin Prices Should Fall

Octavio Lacombe, Brazil’s leading tin producer, said Thursday that the price of tin will have to fall by as much as 25%, to about $9,000 a metric ton, before the price stabilizes.

Brazil, which is not a party to the International Tin Agreement, has become an important tin supplier since it began developing big mines in the Amazon region.

Production so far this year is about 26,000 tons, which makes Brazil second only to Malaysia as a tin producer.

Lacombe, 51, is president of Paranapanema Mining Co., which accounts for 70% of Brazil’s tin output. He said in an interview here that the international tin market needs a strong dose of free trade after the cartel had all but ruined itself in an effort to keep a minimum price of $12,000 a ton.

“Free trade is the only reality,” Lacombe said. “Prices have to come down, and some mines will close. When the supply gets into line with consumer demand, prices will stabilize.”

The 25% price decline envisaged by Lacombe would be a heavy blow to the export income of such major producers as Malaysia, Indonesia, Thailand and Bolivia. All these countries, which adhere to the International Tin Agreement, have already had to cut back production.

Lacombe’s company began its Amazon operations in 1969 and began producing commercially in 1971. At that time, Brazil imported tin from Bolivia to meet its growing industrial demand. By 1978, Brazil was exporting tin, and since then production has been increasing by as much as 35% a year.

“I think Brazil’s production will stabilize for several years,” Lacombe said.