Indonesia's trade ministry looks at closing tin export loophole

JAKARTA Wed Feb 19, 2014 1:14am EST

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JAKARTA Feb 19 (Reuters) - Indonesian trade ministry officials are in talks with the country's tin industry on making tin solder exports subject to a six-month old domestic trading rule, officials said, closing a loophole that has boosted solder shipments.

Shipments of tin from the world's top exporter have been hampered by a regulation introduced in August that forces all tin ingot shipments to trade via a local platform before being exported. Any change could cause further disruption to the flow of the base metal.

Tin exports plunged after the rule came into effect in a bid to halt illegal mining and give Indonesia greater control over prices. Exports have partly recovered but remain erratic, falling 50 percent in January on a year earlier to 4,613 tonnes, including both ingots and solder.

Unlike tin ingots, solder is not subject to the domestic trading rule until January 2015, which has caused a sharp spike in monthly tin solder shipments, from 756 tonnes last October to 1,460 tonnes in January.

Indonesia's sole tin trading platform is run by the Indonesia Commodity and Derivatives Exchange (ICDX), which wants the government to close the loophole on solder, said a trade ministry official who declined to be identified because he is not authorised to speak to the media.

"There is no exact plan to revise tin export regulation so far," said the official, adding that no draft regulation or time frame had yet been agreed. "So far it is just an idea to bring tin solder into the exchange."

The ICDX was unable to give immediate comment on Wednesday, but a senior official at Indonesia's top tin miner PT Timah confirmed the trade ministry was dicussing the tin solder issue.

A source at a solder manufacturer with a unit in Indonesia said that some companies had set up solder making operations in a bid to dodge the new trading rules, which require ingot exporters to join the ICDX.

He was concerned any changes to existing rules would harm existing businesses by boosting administrative costs and affecting their competitiveness on global markets.

"It is not good news for the industry," he said.

The trade ministry official said no decision had been made on accelerated trading rules for solder, and noted that the trade ministry sees it as a finished product, which is in line with the government's policy of promoting downstream industries.

Industry group ITRI, which has forecast a 6 percent rise in Indonesia's 2014 tin output to 90,000 tonnes, has previously described the rise in solder exports as a loophole that should be looked into. (Reporting by Yayat Supriatna and Michael Taylor in Jakarta. Additional reporting by Melanie Burton in Sydney.; Editing by Richard Pullin)

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