INTERVIEW-UPDATE 1-Indonesia plans tin curbs, China LNG talks

(Combines comments on tin, LNG and cost recovery)

By Muklis Ali and Fitri Wulandari

JAKARTA, Aug 26 (Reuters) - Indonesian plans to tighten controls on illegal tin mining should help underpin prices by regulating supplies in the world's second-biggest producer, Energy and Mining Minister Purnomo Yusgiantoro said on Tuesday.

On the energy side, the minister also said that Indonesia would set up a team to renegotiate liquefied natural gas prices it is contracted to supply to China and other Asian countries.

"What we are tackling first is the illegal mining because we are afraid it will cause oversupply in the market and push down the price of tin," Yusgiantoro told Reuters in an interview.

Uncontrolled tin mining in Indonesia's main tin-producing island of Bangka, off Sumatra, has caused environmental damage and caused oversupply in recent years, dragging down tin prices.

But tin prices on the London Metal Exchange MSN3 surged to an all-time high of $25,500 a tonne in mid-May on worries on supply from Indonesia after the government launched a crackdown on illegal mining and smelting.

The minister also said that China had agreed to hold talks with Indonesia, the world's second largest producer of LNG, on renegotiating prices under a contract previously agreed by the two countries.

Indonesia closed the deal to supply LNG from its Tangguh field in Papua before the current rally in oil prices, when prices of the gas chilled to liquid form in turn were much lower.