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[Jakarta] Plans by Indonesia to limit tin output and shipments may slash production by half next year, officials in the world's biggest tin exporter said on Wednesday, adding that rushing their implementation without consultation may lead to protests.
Earlier this week, Indonesia's outgoing government announced plans to impose output limits and export quotas on tin, in an effort to support benchmark prices that hit 14-month lows, but gave no timeframe or information on volume targets.
Indonesia has a track record of attempting to influence benchmark tin prices and new government curbs have the potential to bolster global prices. "They (the government) are saying about 40,000 tonnes,"Agung Nugroho, corporate secretary at the country's biggest tin miner PT Timah told Reuters on 2015 production. "They are trying to support the price and regulate it better ... it is a very good proposal." Overall tin output in Indonesia, which has around 47 smelters according to industry sources, is seen falling 13 per cent to 80,000 tonnes in 2014.
London Metal Exchange tin prices were expected to average US$23,135 a tonne in 2014, according to analysts polled by Reuters, but are currently around US$19,750 a tonne.
Industry sources expect further falls due to weaker orders from solder makers in the fourth quarter and a lack of buying from China.
The latest effort to control prices and the domestic industry will ensure tin mining concession areas tally with smelters' output to stop illegal mining, said Nugroho, adding this would stop environmental damage and extend the life of tin mining in Indonesia.
A group of Indonesian tin sellers have already put in place a self-imposed slowdown in exports to boost prices, while police in top tin-producing region Bangka Belitung have increased checks for illegal miners and shipments.
The government must consult with the industry before implementing the new rules, said Jabin Sufianto, president of the Indonesian Association of Tin Exporters, which includes 18 out of the 22 tin smelters registered to sell on the country's only domestic bourse. "This is a very harsh decision by the (mines) ministry,"added Sufianto. "How will they decide which companies will get to produce how much tonnage? "Ninety percent of association members would oppose this ruling," he added. "There will be unrest in Bangka, a big protest." President-elect Joko Widodo is due to take office on Monday, and it is still unclear whether his new government will also look to impose limits on tin exports and production.
Nugroho has little doubt that the planned regulation, which will give greater powers to the central government, will happen next year as expected.
The mines ministry's coal and minerals director general Sukhyar is behind the tin export curbs plan, said Nugroho, and he was a key driver in ensuring the nickel ore export ban came into being earlier this year despite investor doubts. "We believe that the new government will implement it,"added Nugroho. "When he (Sukhyar) he says something, we believe it will be implemented." The flow of Indonesian tin is also expected to be hampered further from November, with the onset of the annual monsoon season and new laws that aim to close any export loopholes contained in a domestic trading regulation issued last year. REUTERS