The government has released a newly revised regulation for the tin trade amid concerns over illegal mining activities and an ongoing decline in commodity prices, says a top trade official.
Trade Minister Rachmat Gobel said on Tuesday that if the previous ruling allowed the export of four types of tin, such as refined tin ingots, refined tin non-ingots, tin solders and non-solder tin alloys, the new ruling would only allow the export of three types of tin, namely refined tin ingots, tin solders and other types of tin products.
The regulation regarding the trade of three types of tin will be effective starting on Aug. 1.
"Under the [revised] regulation, tin can be exported only if [producers or miners] have paid the royalty and presented required documents on working plans and budgets as well as having a clean and clear status, which is all verified by the Energy and Mineral Resources Ministry's directorate general for minerals and coal," Rachmat said.
In terms of a clean and clear status, the minister was referring to the minerals and coal directorate general making all mining activities in the country comply with state obligations, including royalty payments, preserving the environment and not overlapping with other mining areas.
The requirements for the clean and clear status will be effective from Nov. 1.
According to Rachmat, the revised regulation also requires that both refined tin ingots for export and domestic sale are traded on futures exchanges before shipment or delivery.
Under the previous regulation, only refined tin ingots for export were subject to be traded on local futures exchanges.
Sellers are also required to obtain an export permit from the Trade Ministry before being allowed to ship their products.
Indonesia is the largest exporter of tin, with an overseas shipment last year of over 80,000 tons.
A slight decline in output is expected following the revised regulation, according to Partogi Pangaribuan, the Trade Ministry's director general for foreign trade.
"However, we are expecting that a lower supply from Indonesia will reduce the current oversupply in the market so that the price can be lifted. With the higher price, the country will receive more although the shipment volume is lower," Partogi said.
"Moreover, given the tighter regulation, we will be able to improve the supervision, eliminate illegal mining and protect the environment," he added.
Jakarta listed PT Timah, the biggest tin miner in the country, welcomed the new regulation, particularly because it eliminated the category of refined tin non-ingots as a product that could be exported.
Timah corporate secretary Agung Nugroho said the non-ingots tin category was unclear and had been used by illicit traders so that they could continue shipping their products without having to trade them at local exchanges.
However, he criticised the ministry's Aug. 1 time frame.
"The time frame is too long. Based on past practices, as new policies were introduced to tighten exports, the volume of overseas shipments often jumped because players tried to boost their sales before the regulation came into effect," Agung said.
Thus, he continued, the world's oversupply would be larger and the price would be reduced further.
According to Agung, the current tin ingot price is around US$16,000 (S$21,360) per ton due to a weakening economy in China, the main tin market.