TEMPO.CO, Jakarta – The decline of global tin prices urged the government mull regulating tin commerce. "I'm surprised at how low the price is. We once reached US$25,000 per ton. Why is it not like that now?" R. Sukhyar, director general of mineral and coal at the Ministry of Energy and Mineral Resources, said yesterday.
According Sukhyar, the government plans to increase the price of domestic tin in order to earn profits. To date, the central government has not been involved in regulating tin trade because the data on registered exporters is issued by the provincial governments and the governors.
"It is very strange. It's not about how much the production is, but rather how much the resources are. [If this is allowed to continue] we will exhaust our resources later," he said.
Indonesia's tin production, according to Sukhyar, is instrumental in determining the global price of tin since 70-80 percent of the world's supply comes from Indonesia. "If we lower our production slightly, it will shake up the market price," he said.
Sukhyar said the government wants to limit the number of tin production to 35,000-40,000 tons per year by limiting the provision of export licenses. Currently, Indonesia's tin production volume is well above 40,000 tons, exporting 90,000 tons per year at a price of US$21,000 per ton.
The high production values and the absence of an obligation to process tin are allowing competitor countries such as Malaysia and Singapore to reap the benefits.
Bob Kamandanu, head of the Indonesian Coal Mining Association, welcomes the government's plan regulate the export of mining commodities, saying that it would prevent illegal exports. But he said the system has its weaknesses, particularly in preventing good companies from going.
According to Bob, in giving export licenses there are requirements that burden producers, which is the obligation to pay royalties in advance. "This will hurt companies' cash flows," he said.
ALI HIDAYAT | AYU PRIMA SANDI