Myanmar’s Wa State has halted mining of tin from August 1 and the suspension could be a prolonged one, according to the International Tin Association (ITA).

Despite the mining stoppage, the tin market will likely be volatile during the current quarter as macroeconomic conditions are not favourable for demand and consumption to rise.

Tin prices on the London Metal Exchange (LME) dropped last week from a six-month high of $29,000 a tonne.  According to the ITA, Wa is a major tin mining district in Myanmar. It provides a significant portion of concentrate for China, the world’s largest refined tin producer. 

In 2022, almost two-thirds of China’s imported tin-in-concentrate were from Myanmar, totalling 48,000 tonnes. About 40,000 tonnes of this came from Myanmar’s mine production with Wa contributing an estimated 70 per cent. 

Price up 50% since Nov 2022

During the weekend, the 3-month LME tin contract ended at $28,850 and spot prices were quoted at $27,875 a tonne. Prices are higher by 50 per cent since November 2022.  “The LME tin price is volatile following a steep fall from its previous high of over $29,000 last week,” said Jeremy Pearce, Market Intelligence and Communications, ITA.

In a statement on August 3 , the ITA said the Wa State government has firmly enforced the suspension of all mining activities. “According to the ‘Wa Jing Zi No. 2023-06’ notice issued by the Central Economic Commission on April 15 and the subsequent ‘Notice on the Implementation of ‘Suspension of All Mineral Resources Exploitation’’ on May 20,” it said.

The association said from August 1, all mines and processing plants, regardless of size, have ceased production in Wa State. A majority of local workers have been “temporarily dismissed”, and ore transport vehicles are prohibited from operation to prevent any raw ore transportation. A working group will enforce the suspension with mine inspections.

No comment yet

Top leaders of Wa State convened to discuss the mining ban although no formal statement has yet been released, it said.

“Currently, it is reported that the Wa State government has approximately two million physical tonnes of mined raw ore stocks, with an estimated beneficiation potential of 5,000-6,000 metal tonnes of tin concentrate. However, due to the shutdown of the dressing plant, beneficiation and sales of concentrate products have been halted,” the ITA said. 

Additionally, around 1,500 tonnes of tin ore are awaiting clearance at the Meng’a Port, potentially leading to a period of stagnation in exports after August 10.

The association said the market’s previous expectations of 1-3 months for the suspension of mining “now seem overly optimistic, as the Wa State Government is clearly committed to policy enforcement”. 

Higher July exports

An expectation that processing of stockpiles could still go ahead appears to have been quashed by the ban on ore transport. Reopening of mines may also now take longer, it warned.

However, July exports from Wa State were significantly up as local traders cashed in on inventories ahead of the ban. Until Wa State resumes normal production, China smelting raw material supply is expected to gradually decrease, making it challenging to return to the production levels experienced in the first half of this year, the association said.

Pearce said tin prices have gained primarily on mining coming to halt at Myanmar’s Wa state from August 1. But disconcerting macroeconomic base metal indicators are exerting counter pressures on the market. 

Threat to China

The market speculation is high amid adverse fundamentals such as increasing inventory and low LME warrant cancellations. “A prolonged suspension of Myanmar feedstock threatens China’s production for the rest of the year. We anticipate potential escalations in market volatility coming into Q4,” he said.

According to the Trading Economics Website, one of the macroeconomics fundamentals affecting tin is the 21 per cent decline in global semiconductor sales in May. But tin could also be spurred by Indonesia plans to encourage domestic processing by banning export of tin ingots. 

ING Think, a financial and economic analysis wing of Dutch financial services firm ING, said tin prices gained in July also because China’s biggest tin smelter Yunnan Tin Co, which produced 45,000 tonnes, halted production July 11 for maintenance. The production halt will last for about 45 days, though its annual output is unlikely to be affected. 

30% drop in output

China’s Shanghai Metal Market (SMM) News said the tin market has been boosted by the news that all tin mines and beneficiation plants in the Wa State ceased production on August 1.

When the news of Wa State’s mining halt broke out, research agency BMI, a unit of Fitch Solutions, said Myanmar’s move on tin mining would put pressure on global supplies and prop up prices higher in the short to medium term. 

The research agency said, “We have revised downwards our forecast for Myanmar’s tin production, now expecting a decline of 30 per cent year-on-year (y-o-y) in 2023, decreasing to 28 million tonnes (mt) compared with 40 mt in 2022.”