Indonesia is set to place a production cap on tin output following a global surge in demand for the metal, which has seen it trading at record levels in recent weeks.
Simon Sembiring director general of mineral, coal and geothermal energy at the country's energy and mineral resources ministry, told local media last week that the government planned to limit the country's tin production to 90,000-100,000 tonnes per year from 2009.
Indonesia is the world's largest tin exporter and the second largest producer of the metal after China. Together they control 70% of the global market. Conversely, China's domestic consumption of tin is the world's highest, despite being a net importer with a significant amount coming from Indonesia.
One of the main motives behind the production cap is clear: Indonesia can further boost the selling price of tin by limiting supply. However, MS Marpaung, a director at the ministry of mineral resources, told local media last week that the decision is not about profit, but driven by environmental concerns.
The majority of the tin mines are situated on the islands of Bangka-Belitung. They have suffered significant environmental damage as a result of the industry's activity. The Indonesian authorities would like to see the locals - many of whom turned to mining after pepper farming was affected by low prices at the beginning of the decade - switch to other sectors for employment.
Hudarni Rani, the governor of the Bangka-Belitung province, stated in last year's gubernatorial elections, "People have to be prosperous without tin. Tin will run out one day. Mining is definitely disruptive."
With analysts predicting demand for the metal outstripping supply in coming years, there is no sign of its influence waning over the global tin market.
The world tin industry is smaller than that of other mining resources such as, copper, gold, lead, nickel, uranium and zinc, yet it is a vital resource for the electronic solder business, and is a key component in electronics and packaging.
The London-based Commodity Research Unit (CRU) estimated world consumption will reach 361,000 tonnes in 2008, a 3.9% increase from the previous year.
And in February 2008, the agency predicted an overall supply deficit of 143,000 tonnes by the end of the year.
More immediate issues that the Indonesian authorities have had to tackle include smuggling and illegal production of tin.
In 2006, the amount of tin produced in Indonesia was 125,000 tonnes. However, many feel the actual level of tin reaching overseas markets was much higher due to smuggling and the emergence of many small, independent smelters that are difficult to regulate.
A government crackdown was launched in February 2007. Measures included closing down many of the small smelters and tighter tin export rules. Now smelters can export only refined tin with a minimum purity of 99.85% and must provide proof of royalty payments made to federal and local government. From February to December 2007, total production fell to 86,000 tonnes as a result of the restrictions.
With an overall supply deficit of approximately 8000 tonnes for 2007, tin was trading at $16,252 per tonne by the end of that year, a 270% price hike since 2005. On June 23, 2008, the metal was trading at $22,800 per tonne, a 40% increase over 2007's end-of-year price.
Among the beneficiaries of the bonanza is state tin mining company PT Timah. It recorded a net profit of Rp1.78tr ($1.5bn) for 2007, a 757% increase on its 2006 figures. Approximately 97% of the company's output is exported and the company accounted for 18% of the world's tin supply in 2007.
According to tin analysts, mining company executives will welcome a production cap. Many experienced long periods of slumping prices from the 1980s through to the early 2000s during which many tin mining companies lost money.
With global demand surging and the world's largest exporter expected to cap production, the sales price of the metal looks certain to continue its ascent.
