Tin prices hit new lows for the year in the last week on the back of further macro negativity. While the spot market for tin remains quiet, consumption remains relatively strong with long-term contracts performing well. With Chinese and now Indonesian smelters reducing output at these low prices, tin could move swiftly in the opposite direction once demand begins to pick up again.
The Indonesian government is considering changing the royalty rate for tin. The government has been debating the existing system in a session on 21 June 2022. Currently, tin producers pay a flat rate of 3% on all tin production to the government.
However, the new structure would be progressive, meaning that at higher tin prices, producers pay a higher rate. The change was supported by the Ministry of Energy and Mineral Resources (EDSM) in today’s hearing. The Ministry noted that it would attempt to strike a balance with the rates to both benefit the country and not harm the competitiveness of Indonesian producers.
The proposed rates and final progressive structure have not yet been announced.
The Indonesian government has been looking to increase the value the country gets from its natural resources in recent years. The changing royalty rate structure may be one such way to achieve this. This plan is not an alternative to the proposed change to exports and would affect domestically sold tin as well.