Indonesia sees higher 2011 coal, tin output, fall in copper

* Miners to ramp up production when weather improves

* China, India investment to boost coal output

* Govt optimistic on rebound for tin output

* Copper output to fall on lower grade ore 

Indonesia's government forecasts coal output will increase by 19 percent next year as drier weather enables miners to ramp up production amid growing regional demand, a senior mining official said on Wednesday. 

Indonesia, the world's top thermal coal exporter, is seen producing 327 million tonnes next year, versus expected 2010 output of 275 million tonnes, said Bambang Setiawan, director general of coal and mineral resources at the energy and mineral resources ministry. 

"Demand for coal is good so far. But production can change depending on the weather so hopefully the weather will be better next year," Setiawan told Reuters. 

Indonesia has been hit by unseasonally heavy rains this year during what is normally the dry season of July to September, hitting output of coal, tin and other metals from miners such as Bayan Resources.

Growth in Indonesia's coal output will also be sustained in the next five years by expansion from the country's top 10 miners that make up about two-thirds of the country's production, said Somyot Ruchirawat, president director of PT Indo Tambangraya Megah , the country's fourth-largest producer and a unit of Thai miner Banpu.

"We forecast that Indonesia coal production growth in 2009-2015 will be around 11 percent per year and mostly from the major producers as well as newcomers," said Ruchirawat, at a mining conference in Bali. 

"Supply will be sufficient to meet both the domestic and overseas market," he said. 

Investment by major buyers India and China in the country's coal sector is expected to grow next year as they are struggling to secure supply. "A lot of companies from India and China will be participating in coal investment," said Ruchirawat, adding some would look to be operators while others would just seek to hold equity stakes. 

While Chinese investors have struggled to buy stakes in Indonesian miners so far, Indonesia's powerful Bakrie family has joined forces with the Rothschild banking dynasty to cement its dominance of the Indonesian sector through a London-listed company Bumi Plc that plans to be the largest supplier of thermal coal to China.

TIN REBOUND?

The ministry forecast tin output from the world's top tin producer will climb significantly to 95,097 tonnes from 54,646 tonnes this year, Setiawan said.

However, this projection looks ambitious given a trend of declining output as easily recoverable onshore reserves are depleted and after a crackdown by police on illegal mining. 

Top integrated tin miner PT Timah said its output would only be 40,000 tonnes or less this year because of the heavy rains, down from earlier forecasts for 45-50,000 tonnes, and worries over declining Indonesian output drove tin futures to a record last month. 

Setiawan said production of copper would fall to 665,158 tonnes versus output this year of 908,645 tonnes."Copper production will be lower next year because miners will start mining lower grade ore," he said. 

Production of ferronickel is estimated at 16,014 tonnes in 2011 compared to 18,727 tonnes this year. Source: Reuters