Indonesia's new tin rule good for industry

Jakarta (Antara News) - A new regulation limiting refined tin exports from Indonesia should help create fairer competition globally and support the world price of tin, Thobrani Alwi, president of the world's leading tin miner, PT Timah, said.

The regulation, issued by the Trade Ministry yesterday, stipulates that only exporters which have registered at the ministry will be allowed to export refined tin.

It added that applicants must be companies with legal contracts, or rights to mine and refine tin, and that refined tin for export must meet a tin metal content, or purity level, of at least 99.85 pct.

"The message of the new rule is that only branded refined tin can now be exported and there are only three brands here. Two of them belong to Timah, and the other one to PT Koba Tin," Alwi told XFN Asia in an interview.

"It means that smelters that have exported non-branded refined tin to neighboring countries like Malaysia and Thailand will no longer be able to do it," he said.

He noted that non-branded refined tin sold abroad had a purity level of below 99.85 pct and that it has been typically sold to neighbouring countries at a discount of around 200-300 usd per ton.

Alwi said the new rule will also prevent smelters, which do not have their own legal production areas for making refined tin, or contracts with legal providers of the ore, from obtaining supplies.

He noted that many smelters have bought tin ore at high prices from people who have illegally mined it in Timah's working areas.

The new regulation comes out just months after the government cracked down on a number of illegal smelter operations in the Bangka-Belitung islands.

"I welcome the regulation as it will create a level playing field. It shows that the government is doing its best for the country," Alwi said.

He said the rule will strengthen Indonesia's status as the world's largest tin producer.

"Indonesia will become the biggest player who can move the market," he said.

The price of the metal has been on an upswing and yesterday hit a record high of 12,350 usd per ton on the London Metal Exchange (LME).

"I have always said that realistically the tin price should be at around 12,000 usd per ton. If possible, it could still be fairly priced in the range of 12,000-13,000 usd," he said.

Alwi, though, said he would not favor price gains above 13,000 usd per ton as it may tempt old players who have quit the business to come back, which would have a negative impact on prices.

Timah has estimated its exports of refined tin reached 43,000 tons in 2006, or about 35 pct of total industry exports. (*)
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