What Is the Tin Export Ban in the Mind of Indonesia Government?

According to news on October 20, Indonesia is mulling over a tin export ban in an effort to boost its processing industry, but the government said it has not yet decided when the ban will take effect. Indonesia is the world's largest exporter of refined tin.

What is the plan?

Indonesia plans to ban the export of tin ingots to encourage investors to build production facilities in the country and develop an industry that processes tin into other products, a government official said. There is a similar policy on nickel ore.

Unlike nickel, however, Indonesia is already exporting high-purity refined tin, having banned the export of tin ore from late 2014. The country exports tin rods, solder bars and tin wire, the trade ministry figures show.

The proposed ban is part of a broader plan in Indonesia to stockpile mineral resources such as nickel, tin, copper and bauxite for domestic processing and export higher value-added products rather than just cheap exports of raw materials.

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

When will the ban take effect?

Indonesian President Joko Widodo said the government has not yet decided when the ban will be implemented, but will announce the time once the authorities have completed their deliberations.

Ridwan Djamaludin, a senior official at the Ministry of Mines, said authorities were calculating how much investment and time Indonesia would need to prepare to absorb its output.

What kind of investment is Indonesia looking for?

Authorities are likely to focus on seeking investment in the tin forming industry and tin chemical production.

According to government data, Indonesia already has tin rod and tin coating production facilities, but no other forming facilities for products such as tin rod or tin powder.

An official from the investment ministry said the government wanted to focus on attracting investments that would provide the best value-add.

How much tin does Indonesia produce and export?

Indonesia's largest tin miner and smelter, PT Timah, produced 26,500 mt of refined tin in 2021, accounting for about 7% of global output, a sharp drop from the previous year, data provided by the International Tin Association showed.

Production has continued to decline this year, falling 26% year-on-year to 8,805 mt in the first half of the year, the company said.

Trade Ministry data showed that Indonesia exported 74,671.57 mt of tin metal worth $2.42 billion in 2021.

From January to September this year, Indonesia exported 58,178.69 mt of tin metal, an increase of 11% over the same period last year.

Who is the buyer?

According to this year's shipping data, China is the largest importer of Indonesian tin rods, followed by Singapore, India and South Korea.

Other buyers include the Netherlands, Belgium and Turkey.

How will the ban affect prices?

Chinese buyers are boosting tin imports, wary of a possible export ban from Indonesia, despite sluggish consumer demand as global economic growth slows, said Geordie Wilkes, an analyst at Sucton Financial.

“Consumption is not quite there yet, given that the prices have fallen significantly and profitability has fallen significantly as well," Wilkes added, citing expected weakness in market sentiment.

“We expect tin prices to remain unfavourable."

As of 18:00 Beijing time, LME 3M tin contract stood at $19,150/mt, down about 50% year-to-date, making it the worst performing metal among the LME base metals.