Tin mine supply will continue to grow this year, albeit very weakly, according to a global tin mining outlook report issued by research organisation Fitch Solutions Country Risk & Industry Research on March 9.

“Despite the fall in prices compared with the highs reached after the Russian invasion of Ukraine in early 2022, high prices by historical standards will incentivise capacity ramp-ups, but this will be largely offset by periodic disruption to production in Mainland China in particular,” Fitch Solutions says.

The report indicates that the slow pace at which global tin supply has recovered from the Covid-19 pandemic was significantly outpaced by the rapid recovery in demand, especially as tin is used in electronics through solders in semiconductors, a sector that saw a spike in demand during the pandemic owing to increased sales of medical, as well as home equipment, and personal devices.

The resulting reduction of global refined tin stockpiles continued to force prices higher, leaving the market significantly exposed to price increases. With tin solder being a major part of photovoltaic (PV) cells, which are the main components of solar panels, demand for tin during China's power crunch also rose sharply.

In 2021 and 2022, tin production recovered strongly after the reduced output the previous year amid the pandemic.

“We now believe that this growth from low base effects has largely peaked, and that growth will be slow over the coming decade. We also expect sporadic tightening of lockdown restrictions in major producing countries to constrain the pace at which spare mine capacity can be used,” Fitch Solutions says.

The global tin mining competitive landscape is sparsely populated when compared with many other metals. There is a relative lack of diversity among major producing countries with tin mining in most countries often dominated by a single firm.

For example, in Indonesia, State miner PT Timah holds the most market share in tin concentrate production and was able to further consolidate the industry in recent years. In South America, Minsur, in Peru, is the sole tin miner in the country while State institution Comibol, in Bolivia, dominates output.

Fitch Solutions believes the lack of a diverse crop of producers can lead to weak project pipelines as total investment in the sector is partly constrained by the number of players operating in that sector.

As a result of both factors, the sector has a fairly small pipeline of new projects. In the long term, it is believed that this will weigh on long-term production output growth, thanks to declining ore grades and a lack of replacement projects.

Fitch Solutions expects that the most significant factor contributing to slowed output growth will be more stringent environmental regulations in countries such as China, Malaysia and Indonesia.

For example, the Perak state, in Malaysia, announced a moratorium on new exploration licences in June 2019 owing to concerns surrounding the treatment of its waterways, halting Australian junior Elemontos’ Temengor tin project.

In Indonesia, protests by coastal communities threaten to disrupt PT Timah's expansion of offshore mining for tin in the country.

Fitch Solutions says a moderately favourable price outlook will make projects more likely to receive management approval to move forward because the economics are more likely to be realised.

In particular, despite a weaker performance relative to the previous three years owing to declining ore grades, the research company believes Myanmar is showing upside potential over the medium to long term.

“The updated Myanmar Mining Law implemented in 2018 has sparked interest from foreign and domestic mining firms, increasing permit applications for new mining projects including tin. We expect rising tin prices will lead to improving margins among domestic producers in Peru, Australia and Bolivia, which will prompt continued production growth in these countries,” Fitch Solutions says.

Aggregated, country-by-country forecasts currently imply mine growth will remain weak compared with previous years. Global tin mine production grew at a yearly average rate of 3.2% year-on-year over 2013 to 2022, with Fitch Solutions forecasting a yearly growth rate of 0.6% over 2023 to 2032.

“This would be significantly slower than annual average growth rates for other metals including copper, nickel, iron-ore and gold,” the company says.

Fitch Solutions expects China to remain the world’s largest tin mine producer throughout this forecast period to 2032. According to the forecasts, China will account for 25.8% of global tin mine output in 2023, a drop from 2017 when it contributed 29.7% of global mine output.

Indonesia trails Chinese tin production at 26%, with the ability to surpass China in the coming years if the country cannot find a replacement for imports from Myanmar, while faced with depleting domestic reserves.

A 20 000 t supply cut announced by Chinese smelters in September 2019 reduced global tin production by 6%, providing an opportunity for foreign mining companies to capture more market share. Indonesia's PT Timah, the second largest global tin producer, possesses the resource capability to compensate for China’s declining ore availability.

If prices remain as they are currently, Fitch Solutions believes it is likely that PT Timah will ramp up production, which could pose challenges for Chinese firms later seeking to reclaim lost market share.

Fitch Solutions believes that Yunnan Tin will account for the bulk of growth in China's tin output over the coming years. Yunnan Tin is the world's largest refined tin producer, producing 77 100 t of refined tin in 2022, according to the International Tin Association.

Additionally, the firm accounts for about 40% of total refined tin output in China. Yunnan Tin was one of the tin producers that pledged to cut production in late 2019 owing to low prices, weak domestic demand and a low availability of tin ore. Prior to the collective cut, the firm was forging ahead with a pipeline of expansion plans at its Laochang and Wuchangping mines.

The risks to Fitch Solutions’ production forecast are slated to the downside, the company says.

Details on tin mining projects and expansion plans in countries such as Myanmar, Indonesia and China are not as regularly reported compared to other base metal projects, which may cause the forecast to be overly optimistic as growth rates are weighted more closely to price increases.

In addition, older tin projects that are not replaced will experience ore-grade decline as they age, which will weigh on production.

Fitch Solutions says that a tighter-than-expected clampdown on tin mining activities globally – particularly in China – owing to environmental concerns, could significantly impair mine supply over the coming years.