Indonesian police stop Timah's suction dredge vessels

PANGKALPINANG/JAKARTA, March 18 (Reuters) - Indonesian police have stopped four dredging vessels owned by tin miner PT Timah Tbk (TINS.JK) and its partners from operating, an official said late on Tuesday, which could affect the firm's tin production.

Timah, the world's largest integrated tin miner, has increased its offshore tin mining, which requires the use of suction dredge vessels, as tin reserves at its onshore mines are declining.

The marine police unit has sealed and stopped four vessels because they were suspected of using fake shipping permits, a police official said. The vessels are now anchored at Muntok Port, a public port where some of Timah's smelters are located, the official said.

"Every foreign ship must obtain an operating permit issued by the transportation ministry. We suspected there are some suction dredge vessels that are using fake shipping permits," said Hero Henrianto, head of the investigating team at the marine police unit.

Henrianto said his team found that the four vessels, one of which belongs to Timah and the other three to its partners, are not registered with the transportation ministry.

Timah said the company has not received any information about the case, but said its vessels have all the appropriate documents. It also warned that this could affect its tin output this year as the vessels help load tin from the offshore mines.

"Currently, we have three suction vessels and hire more than 20 vessels of this type from our partners, which operate in our concessions," said Abrun Abubakar, corporate secretary.

Some of the partners are foreign shipping firms.

Abubakar said tin output this year may be less than 48,000 tonnes, because of falling prices and weak demand. In 2008, Timah produced 49,029 tonnes of refined tin down 16 pct from 58,325 tonnes in 2007 due to slow demand. (Reporting by Dwi Satmoko and Dicky Kristanto; Editing by Sara Webb and Valerie Lee)