Indonesia weighs impact of tin export ban

Jan 05, 2024

President says timing still being decided as country pushes for more value-added processing at home

published : 20 Oct 2022 at 16:30

writer: Reuters

JAKARTA: Indonesia has yet to decide the timing of a possible ban on tin exports and is still making calculations about its impact, President Joko Widodo said on Thursday, as the country pushes to step up domestic processing.

The world's top tin exporter, Indonesia has already moved to halt shipments of a number of other metals in order to develop more processing at home. It now exports about 95% of its tin production.

Jokowi, as the president is known, said the government wanted to avoid any financial losses that companies may face from a ban but stressed authorities would steer the mining industry towards more domestic downstreaming.

"Everything must go into industrial downstreaming because the added value is there," he told reporters in a streamed video, after visiting a smelter in the tin mining hub of Bangka Belitung.

On Wednesday, a mining ministry official said the government was collecting data on what processing industries Indonesia would need to fully absorb its own production of the metal, should it decide on the export ban.

"We have not decided when we will stop exporting tin raw materials," Jokowi said. "We will calculate everything so that everything goes well, no one is going be at a loss."

Indonesia last year exported 74,672 tonnes of tin metals, worth $2.42 billion, in the form of pure bars, solder bars and wires, trade ministry data showed.

From January to September it had exported 58,179 tonnes of tin metals to markets such as China, Singapore, South Korea and others in Europe.

The tin industry would support the government's programme to increase value addition at home, said Jabin Sufianto, secretary-general of the Association of Indonesian Tin Exporters.

"We have provided available data for the government to create a roadmap for downstreaming that can benefit the state and businesess," Jabin said.

The state tin miner PT Timah, one of the world's biggest refiners, has developed various downstream tin products including tin chemical and soldering in the past years, chief executive Achmad Ardianto said.

On Thursday, President Jokowi visited the construction site of PT Timah's Ausmelt furnace which is expected to be completed in November and will be able to process lower grade tin ore. It will have an output capacity of 35,000 tonnes tin ingots annually.

PT Timah produced 26,500 tonnes of refined tin in 2021, or 7% of global output and a sharp 42% drop from a year earlier, data provided by the International Tin Association showed.

Investment ministry official Heldy Satrya Putera said potential investors in the sector had expressed interest after being approached by the government, but declined to give more details.

He said the government would come up with a roadmap for investment, which it would prefer to steer into industries that offer the best prospects for value addition.

Indonesia already has tin bar and tin coating production facilities but it does not have other forming facilities for products such as tin rod or tin powder.

Global tin prices are not expected to be affected significantly by an Indonesian policy shift in the near term, market analysts say.

Chinese buyers are boosting tin imports, wary of a possible Indonesian export ban, but consumer demand is slowing along with global economic growth, Sucden Financial analyst Geordie Wilkes said this week.

"The import arbitrage was open but also the threat of an Indonesian ban also lead to what we saw with nickel is a front loading of those material imports there," he said.

"Consumption is not quite there and the profitability is a lot less considering the price has fallen quite sharply," Wilkes said, adding that market sentiment was expected to stay weak.

"We expect price to remain on the back foot for tin."

Benchmark three-month tin contracts on the London Metal Exchange (LME) were quoted at $19,220 a tonne on Thursday, down 50% year-to-date, making tin the worst performer in the LME base metals complex.