By the end of 2021, Indonesia (hereinafter referred to as Indonesia) has 800000 tons of tin ore reserves, accounting for 16% of the world, and the reserve production ratio has been 15 years, lower than the global average of 17 years. The existing tin ore resources in Indonesia have deeper deposits with lower grade, and the output of tin ore has been greatly suppressed. At present, the mining depth of Indonesia’s tin mine has decreased from 50 meters below the surface to 100 ~ 150 meters below the surface. The mining difficulty has increased, and the output of Indonesia’s tin mine has also decreased year by year, from the peak of 104500 tons in 2011 to 53000 tons in 2020. Although Indonesia is still the world’s second largest supplier of tin ore, its share of global tin production decreased from 35% in 2011 to 20% in 2020.

As the world’s second largest refined tin producer, Indonesia’s refined tin supply is very important, but Indonesia’s total refined tin supply and supply elasticity show a downward trend.

First, Indonesia’s raw ore export policy continued to tighten. In November 2021, Indonesian President Joko Widodo said he would stop Indonesia’s tin ore export in 2024. In 2014, the Ministry of trade of Indonesia issued trade regulation No. 44 to prohibit the export of crude tin, which is intended to curb the loss of a large number of tin resources at low prices and improve the addition of its tin industry and the pricing voice of tin resources. After the implementation of the regulation, the output of tin mine in Indonesia has been reduced. In 2020, the matching ratio of tin mine / refined tin output in Indonesia is only 0.9. As the smelting capacity of Indonesia is lower than that of tin ore, and the domestic smelting capacity is difficult to digest the originally exported tin ore in the short term, the output of tin ore in Indonesia has decreased to meet the smelting demand of the country. Since 2019, the matching ratio of refined tin output of Indonesian tin mine has been less than 1, while the matching ratio in 2020 is only 0.9. The output of tin mine has been unable to meet the domestic refined tin production.

Second, the overall decline of resource grade in Indonesia, facing the problems of land resource dilution and increasing difficulty of seabed mining, curbing the output of tin ore. At present, submarine tin mine is the main part of tin mine output in Indonesia. Submarine mining is difficult and costly, and tin mine output will also be affected seasonally.

Tianma company is the largest tin producer in Indonesia, with 90% of the land area approved for tin mining, and its coastal tin production accounts for 94%. However, due to the poor management of Tianma company, its mining rights have been overexploited by a large number of small private miners, and Tianma company has been forced to strengthen its control over mining rights in recent years. At present, the company’s tin mine output is more dependent on submarine tin mine, and the proportion of coastal tin mine output has increased from 54% in 2010 to 94% in 2020. By the end of 2020, Tianma company has only 16000 tons of high-grade onshore tin ore reserves.

Tin metal output of Tianma company shows a downward trend as a whole. In 2019, the tin output of Tianma company reached 76000 tons, with a year-on-year increase of 128%, which is a high level in recent years. This was mainly due to the implementation of new export regulations in Indonesia in the fourth quarter of 2018, which enabled Tianma company to obtain the output of illegal miners within the scope of the license in terms of statistics, but the company’s actual tin production capacity did not increase. Since then, the tin output of Tianma company has continued to decline. In the first three quarters of 2021, the refined tin output of Tianma company was 19000 tons, a year-on-year decrease of 49%.

Third, small private smelting enterprises have become the main force of refined tin supply in

In the future, Indonesia’s tin resources will be concentrated in large smelters

Recently, Indonesia’s tin ingot exports recovered year-on-year, mainly due to the growth of tin ingot exports from private smelters. By the end of 2020, the total capacity of refined tin of private smelting enterprises in Indonesia was about 50000 tons, accounting for 62% of the total capacity of Indonesia. One notable feature of tin mining and refined tin mining in Indonesia is that most of them are small-scale production by private enterprises, and the output will be flexibly adjusted according to the price level. When the tin price is high, small enterprises immediately increase production, and when the tin price falls, they choose to close production capacity. Therefore, the output of tin ore and refined tin in Indonesia has great volatility and poor predictability.

In the first three quarters of 2021, Indonesia exported 53000 tons of refined tin, an increase of 4.8% over the same period in 2020. The author believes that the refined tin export of local private smelters has made up for the gap of the decline of refined tin output of Tianma company. However, it is worth noting that the capacity expansion and actual export volume of private smelters will continue to be regulated by the increasingly strict environmental protection review in Indonesia. As of January 2022, the Indonesian government has not issued a new tin export license through the exchange.

The author believes that in the future, Indonesia’s tin resources will be more concentrated in large smelters, the possibility of significant growth of refined tin output of small enterprises will be less and less, the refined tin output will tend to be stable, and the output elasticity will decline systematically. With the decline of the grade of raw tin ore in Indonesia, the small-scale production mode of small enterprises is becoming more and more uneconomical, and a large number of small enterprises will be cleared out of the market. After the introduction of Indonesia’s new mining law, the supply of tin raw ore will flow more to large enterprises, which will have a “crowding out effect” on the supply of tin raw ore to small smelting enterprises.