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Markets // Market Analysis

Indonesian governor imposes tin licence moratorium.

Thursday, 24 August 2017

The Governor of Bangka Belitung, Erzaldi Rosman Djohan, has announced a moratorium on issuance and renewal of tin mining licences in the Indonesian province, asserting the need to address damage to the environment from illegal mining as well as illegal exportation of tin concentrate, according to local news sources.

According to the governor, the moratorium means no new mining licences or extension of existing licences will be granted for the next two or three months while new regulation on tin mining is being drafted by the government. In addition to addressing illegal mining in the province, the moratorium is intended to help stop exportation of tin ore, which has been banned since early 2014. Erzaldi has claimed that mining companies have illegally exported tin ore from the province via unregistered harbours. It is understood that the regulation currently being drafted could be effective by the end of this year and will include stricter mine site reclamation obligations as well as requirements for mining companies to further limit the ecological impact of their activities.

On the subject of illegal mining on Bangka, state-owned tin producer, PT Timah, has reported that it believes illegal mining is in decline, partially as a result of a less-confrontational approach it is taking to address the problem. Timah finance director Emil Ermindra said that the company has sped up payments to individual miners to prevent the proliferation of illegal mining facilitated by sales to middlemen. The company does not expect the moratorium to impact its own tin production because the company's current mining business permit (IUP) is valid until 2025.

ITRI View: While this news suggests potential restriction of Indonesian tin supply, there is too little information to determine the scale or significance of any impact on export volumes. In the short-term, the moratorium will presumably only impact supply from those companies whose licences are due for an extension, something that is not currently clear. The impact of the new regulation on tin mining is equally uncertain, particularly as it is still in draft, but may be a more permanent constraint on supply when it becomes effective if its enforcement leads to closure of non-compliant mining areas or operators.

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