Indonesia – tin smelting over-capacity and poor supervision

ITRI reports that at a press conference in Jakarta last week the Ministry of Energy and Mineral Resources announced results of audits of tin smelters in Bangka Belitung and Riau islands carried out since March. It concluded that capacity utilisation had been only 21% in 2015 and that there has been poor supervision of mines and smelters by the Bangka Belitung provincial government. Ministry Inspector General Husein Mochtar said that only 29 out of 47 smelters surveyed were still operational and that the government had issued “clean and clear” certificates for 498 out of 755 IUP mining licences.

According to CNN Indonesia, rated annual smelting capacity in the country was 340,630 t/y, while refining capacity was 339,186 t, implying capacity utilisation rates of 21% in 2015. The data excludes companies producing tin products and solders, which are licenced by the industry ministry. Following the results of the audit, the Ministry has taken the decision to stop issuing new IUPs.

Cogencis reported that Husein concluded that mines in Bangka Belitung “were poorly supervised by the provincial government and there was no reliable data to go by”, adding that “contracts between tin miners and smelters were also obscure in terms of volume.” He was also reported to have been critical of the Indonesia Commodity Derivatives Exchange (ICDX), through which all refined tin exports must be traded, for lack of co-operation in providing data to verify audit results.

The ITRI view is that the “press reports indicate the Indonesian government’s serious commitment to stronger supervision of the tin sector, which has already been reflected in a considerable reduction in production and exports since export regulations began to be tightened in August 2013. Although sales have increased after a very slow first quarter, it is unlikely that annual exports in 2016 will exceed some 65,000 t.”