Indonesia's tin islands: blessed or cursed?

By Ed Davies and Fitri Wulandari

PANGKALPINANG, Indonesia (Reuters) - Tin mining on these sleepy islands off Sumatra has brought wealth, but at a price; it is literally eating away at the land.

The scale of the environmental damage on the Bangka-Belitung islands can be most clearly seen from the air, revealing a lunar landscape of craters and hundreds of highly acidic, turquoise lakes created by centuries of largely unregulated tin mining.

Efforts in recent years to control illegal mining on the islands have reverberated thousands of miles away by spooking world markets for tin in global financial centers such as London.

"We will continue to clamp down as long as there are violations," said Iskandar Hasan, Bangka-Belitung's police chief, adding that mining was still going on in prohibited areas such as protected forests in the province of about 1 million people.

Tin exports from Indonesia, the world's second-biggest producer after China, have slowed after a government clampdown on illegal mining in Bangka-Belitung, helping make tin one of the best performers on the London Metal Exchange in recent years.

The white metal, widely used in food packaging and to solder electronic products, hit an all-time high of $25,500 a tonne in May. It has halved along with falls in most other metals due to concerns over a global recession.

Indonesia's government has said it will set an annual tin production quota of 100,000 tonnes from next year in a bid to reduce environmental degradation in the main tin-mining areas.

But the situation on the ground is often murky.

Thousands of small-scale traditional and often illegal mining operations sprung up in the late 1990s when the Asian financial crisis wiped out jobs in other sectors of the economy.

FINDING TIN

It takes only a short drive from the provincial capital Pangkalpinang, which boasts its own tin museum complete with display cabinets with gleaming bars of tin, to come across signs of mining right near the road.

One miner, Aji, who had come to Bangka three years ago from Lampung in southern Sumatra, said he was more worried about dwindling tin supplies than a police crackdown.

"In the past, it was very easy to find tin. Now it's very difficult," added the 32-year-old, who earns about 100,000 rupiah ($10) a day, which he shares with two other miners in his team.

Sitting next to a large crater filled with murky looking water, Aji explained how the miners' search for tin with a high-pressure water jet to hose away the crumbling sand soil and then separate out the seams of darker ore.

Even this small-scale mining has left the area completely bare of the thick tropical vegetation that once existed.