Reuters reported that Indonesia will impose a new royalty charge on all tin shipments and only allow the export of refined tin a move that is expected to lend support to weakening global prices.
A trade ministry official said that Southeast Asia’s largest economy which supplies about 30% of the world’s tin consumption, expects to produce 90,000 tonnes of refined tin this year up from 78,965 tonnes last year on expectations of improved weather conditions.
Mr Deddy Saleh DG of foreign trade at the trade ministry said that “Every exporter will have to pay royalty before they can ship the metal. We are preparing a new regulation on tin export as an amendment to the existing trade minister decree. It is almost final actually.”
Mr Saleh said that under the new rule, the government will not allow export of raw tin, tin ore and concentrate and will only permit refined tin shipments. Only tin which its royalty paid by exporters can be shipped for export. This is seen to be consistent with the government’s policy to stop non-value added raw material exports within the next three years.
Tin, used in electronics, plating and lead free solders, struck a record high above USD 33,000 in April. A crackdown on illegal mining, tighter export regulations, declining onshore reserves and rain that had hindered production in Indonesia have helped drive the tin rally earlier this year.
Mr David Wilson analyst at Societe Generale in London said that “We have seen Indonesian policy having a significant impact on tin in recent years, notably with the clampdown on ‘illegal’ tin mining constraining tin ore and concentrate shipments over the past year and a half. Further cutbacks in ore or concentrate exports can only be supportive for prices, as it would impact on refined production levels.”
Earlier this week, the Indonesian Tin Industry Association told Reuters that an environmental crackdown in the main tin producing region of Bangka Island was hindering domestic smelters’ supplies. Tight supplies and resilient demand will keep tin prices high this year, despite the impact of the earthquake on big consumer Japan.
Mr Wilson said that it appears that Indonesia had, at least unofficially, modestly relaxed restrictions on tin mining and exports as tin prices moved to record highs. Now that prices are at the year’s lows, the announcement does appear to be well timed in terms of providing a floor to prices. However with the faltering demand growth outlook, due to slowing manufacturing growth in China and significantly lower growth scenario for Europe and the US we would still expect to see a relatively balanced market this year.
Mr Stephen Briggs analyst of BNP Paribas said that “The royalty obviously will put upward pressure on international pricing, as Indonesia is such an important source of supply but how much pressure will depend on how big the royalty is. The ban on exports of tin ore is in line with their previously announced policy to halt exports of non value added raw materials by 2014.
(Sourced from Reuters)
