The world’s largest tin producer, Indonesia, has stopped exporting refined tin since January due to a new mining regulation. The move has caused a ripple effect in the global tin market, pushing prices to a six-month high and creating supply shortages for top consumer China.
New regulation causes disruption
Indonesia’s Ministry of Energy and Mineral Resources issued a regulation in December 2023 that requires tin miners to submit a three-year work plan for approval before they can export their products. The regulation aims to streamline the export process and reduce bureaucracy, but it has also created a backlog of applications that the ministry is struggling to process.
According to the ministry, only one company, state-owned PT Timah, has received its export permit so far, while hundreds of other miners are still waiting for their approvals. As a result, Indonesia’s refined tin exports plunged to just 400 tonnes in January, compared to 6,000 tonnes in December and 7,500 tonnes in January 2023.
Indonesia accounts for about 20% of global tin demand, which is mainly used for soldering in electronics and electrical products. The sudden drop in exports has left many buyers scrambling for alternative sources of supply, especially in China, which relies on Indonesia for about 40% of its tin imports.
Prices surge amid tight supply
The supply disruption in Indonesia has boosted tin prices on the London Metal Exchange (LME) to above $27,400 per tonne in February, the highest level since August 2023. Tin is the only base metal that has gained this year, while the rest have suffered from weak demand and reduced manufacturing activity amid the coronavirus pandemic.
Analysts expect tin prices to remain elevated in the near term, as the supply situation in Indonesia is unlikely to improve quickly. The ministry has said it will expedite the approval process, but it has not given a clear timeline for when all the applications will be processed. Some industry sources estimate that it could take up to six months for exports to resume normally.
Meanwhile, the supply outlook from other major producers is also uncertain. Myanmar, the world’s third-largest tin producer and China’s main supplier, has suspended operations at its largest mine, Man Maw, since August 2023, due to a reserve audit by the semi-autonomous Wa State. The mine, which accounts for 70% of Myanmar’s output, has not announced a restart date yet.
Opportunities for green and recycled tin
The tin market’s woes have also created opportunities for more sustainable and environmentally friendly sources of tin, such as green and recycled tin. Green tin refers to tin that is produced with minimal environmental impact, such as using renewable energy, reducing water consumption, and avoiding harmful chemicals. Recycled tin refers to tin that is recovered from scrap metal, electronic waste, and other end-of-life products.
According to the International Tin Association, green and recycled tin could account for up to 40% of global tin supply by 2030, up from 25% in 2020. This would help reduce the reliance on conventional mining, which often involves deforestation, pollution, and human rights violations. It would also help meet the growing demand for tin from emerging sectors, such as electric vehicles, renewable energy, and smart devices.
The association has launched several initiatives to promote green and recycled tin, such as the Code of Conduct, the Sustainability Reporting Standard, and the Responsible Tin Initiative. These initiatives aim to improve the transparency, traceability, and accountability of the tin supply chain, and to encourage best practices among tin producers, traders, and consumers.
A bright future for tin
Despite the current challenges, the tin market has a bright future ahead, as the metal is essential for many modern technologies and applications. Tin demand is expected to grow by 2.6% annually until 2030, driven by the increasing use of soldering in electronics, tin plating in corrosion protection, and tin chemicals in various industries.
The tin market is also undergoing a transformation, as more producers and consumers adopt green and recycled tin to reduce their environmental footprint and social impact. This will help create a more resilient and responsible tin industry that can meet the needs of the present and the future.
Source: ReutersÂ
