* Can avoid VAT on concentrate imports if processed metal exported
* Yunnan Tin says "lots of preparation" before starting shipments
* China has not been major tin exporter for nearly a decade
By Muyu Xu and Melanie Burton
BEIJING/MELBOURNE, June 20 (Reuters) - China's Yunnan Tin Co Ltd, the world's biggest tin producer, says it has received government approval for so-called "processing trade", churning out refined metal for export using concentrate shipped in from abroad.
That could provide a further boost to Chinese tin exports that have already been climbing this year, buttressing dwindling stocks abroad and dampening global prices.
"We don't have a clear timeframe for (such) tin exports ... as there is lots of preparation work to do. We are in talks with the Ministry of Commerce and customs to go through the process," Yunnan Tin Co (YTC) official Yue Min told Reuters, without giving further details.
The agreement means that YTC will be able to skip the 17-percent value-added tax (VAT) on refined metal exports that it has produced from imported concentrate, said tin industry body ITRI.
The Chinese government did not immediately respond to a faxed request for comment.
The step comes after China, the world's biggest user and producer of tin, early this year scrapped 10-percent duty on all exports of refined tin, ending a policy that had crimped export volumes since it was introduced in 2008.
YTC is by far the world's biggest producer of refined tin, with some 76,000 tonnes of output last year, around three times the amount of No.2 producer, Malaysia Smelting Corp, according to data from ITRI.
YTC's approval could indicate that other tin producers may also get the green light for processing trade, although that was unlikely to happen in the near term, market participants said.
"I think a lot of that concern about tightening supply outside of China has been relieved with this new potential for increased Chinese exports," said Tom Mulqueen of ITRI in London.
"We are likely to see more significant exports than we've seen so far this year and last year."
China's tin exports have more than doubled so far in 2017, though still remain at modest levels of around 200 tonnes. That compares with 735 tonnes for 2016 and more than 23,000 tonnes in 2007. Although China has its own reserves, it has imported much more concentrate from Myanmar in recent years.
London Metal Exchange tin stocks have sunk below 2,000 tonnes to the least since 1998, while benchmark LME tin prices have fallen more than 7 percent so far this year, making it the second worst performing base metal after nickel.
Traders noted that international demand for tin would need to heat up further for LME prices to attract metal out of China. Shanghai Futures Exchange tin at 144,440 yuan ($21,195) a tonne is still more expensive than LME tin at $19,640. ($1 = 6.8148 Chinese yuan renminbi)
Reporting by Muyu Xu and Melanie Burton; Editing by Joseph Radford