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Indonesia will roll out revised rules to oversee domestic tin mining and exports.
The country’s central government will soon be responsible for providing the clean and clear status to mines that certifies that mining activities are carried out in compliance with state rules.
“The step is to plug loopholes in the current system where no single authority is responsible for granting licenses,” Agung Nugroho, PT Timah corporate secretary, told Metal Bulletin.
“If the centre finds that the right documentation is not in place, they can enforce a production halt,” he added.
The requirements for the clean and clear status will be effective November 1, the International Tin Research Institute (iTRI) reported last month.
Another rule effective August 1 mandates that all raw materials for production of solders or alloyed tin products be sourced through the Indonesian Commodities Exchange (ICDX), Nugroho added.
Exports of solders and alloyed tin products will be allowed after the exporter has proved the tin was sourced from the exchange.
The rule extends to the domestic market in that a tin producer can no longer sell ingots to a solder maker directly.
“The move is not likely to have a major impact as Indonesia is hardly exporting any solder,” a trader said.
“The macro factors are causing worries in the market and demand itself is not looking great for tin,” he added.
According to iTRI data, the country exported 5,071 tonnes of tin in April, all of it in ingot form.
Weak tin prices are affecting producers such as PT Timah that has embarked on an efficiency programme to cover costs.
“We will not produce more than 1,500-2,000 tonnes per month from Kundur and Bangka Belitung smelters combined as the current selling price is not good to cover production costs,” Nugroho said.
“We will continue to honour long-term contracts,” Nugroho added.
Tin prices on the London Metal Exchange have fallen from over $19,000 per tonne in the beginning of this year to nearly $15,500 per tonne this month.
Stocks on the London Metal Exchange have fallen to 7,570 tonnes this month but market participants have pointed at rising exports of concentrates from Myanmar to China as a key factor keeping tin prices in check.
Deepali Sharma deepali.sharma@metalbulletinasia.com