Explanation – What is Indonesia’s proposed tin export ban?

By Fransiska Nangoy and Bernadette Christina

JAKARTA (Reuters) – Indonesia, the world’s biggest exporter of refined tin, is considering a ban on exports of the metal to attract investment in its processing domestically, although the government has said the timing is not yet clear. had not yet been decided.

WHAT IS THE PLAN?

Indonesia plans to ban the export of tin ingots to encourage investors to set up production facilities and develop its industries to process tin into other products locally, a government official has said. . It has a similar policy for nickel ore.

However, unlike nickel, Indonesia already exports high-purity refined tin, having banned tin ore exports from late 2014. It exports tin bars, solder bars and son, according to data from the Ministry of Commerce.

The ban is part of a wider Indonesian plan to reserve mineral resources such as nickel, tin, copper and bauxite for domestic processing and to export higher value-added products instead of just ship cheap raw materials.

Indonesia consumes only 5% of the refined tin it produces and exports 95%.

(Indonesia Tin Exports https://fingfx.thomsonreuters.com/gfx/ce/egpbynnbkvq/Pasted%20image%201666248665963.png)

WHEN WILL THE BAN BE IMPOSED?

President Joko Widodo said the government has not decided when the ban will be implemented and the timing will be announced once authorities complete their deliberations.

Senior mines ministry official Ridwan Djamaludin said authorities were calculating the investment and time Indonesia needed to prepare at home to be able to absorb its production.

WHAT INVESTMENT IS INDONESIA LOOKING FOR?

The authorities can concentrate on seeking investment in the tin forming industries and the chemical production of tin.

According to government data, Indonesia already has production facilities for tin bar and tin coating, but it does not have other forming facilities for products such as tin wire or tin powder.

An official from the Ministry of Investment said the government wanted to focus on attracting investments with the best added value.

HOW MUCH TIN DOES INDONESIA PRODUCE AND EXPORT?

PT Timah, Indonesia’s largest tin miner and smelter, produced 26,500 tonnes of refined tin in 2021, representing 7% of global production and a sharp drop of 42% from the previous year, according to data provided by the International Tin Association.

The company said its production continued to decline this year, down 26% year-on-year to 8,805 tonnes in the first half of 2022.

Indonesia exported 74,671.57 tons of tin metal in 2021, worth $2.42 billion, according to data from the Ministry of Commerce.

From January to September this year, it exported 58,178.69 tonnes of tin metal, up 11% from the same period last year.

(Global refined tin production in 2021 https://fingfx.thomsonreuters.com/gfx/ce/byprloobwpe/tin.png)

WHO ARE THE BUYERS?

China is the top importer of Indonesian tin bars, according to this year’s shipment data, followed by Singapore, India and South Korea.

The other buyers are the Netherlands, Belgium and Turkey.

HOW WILL A BAN AFFECT PRICES?

Chinese buyers are increasing tin imports, wary of a potential Indonesian export ban, though consumer demand is slowing alongside global economic growth, Sucden Financial analyst Geordie Wilkes said on Tuesday.

“Import arbitration was open, but the threat of an Indonesian ban also led to what we’ve seen with nickel, which is an early loading of those material imports there,” did he declare.

“Consumption isn’t quite there and profitability is much less given the price has fallen quite sharply,” Wilkes said, adding that market sentiment is likely to remain weak.

“We expect the price to remain lower for tin.”

The three-month benchmark tin price on the London Metal Exchange was $19,220 a tonne at 0823 GMT, down 50% year-to-date and is the worst performer in the metals complex LME base.

(Tin price https://fingfx.thomsonreuters.com/gfx/ce/lbpggrrmapq/tin%201.png)

(Reporting by Fransiska Nangoy and Bernadette Christina Munthe in Jakarta, Mai Nguyen in Hanoi; Editing by Robert Birsel)