Timah Unaffected by Revised Regulation on Tin Bar Exports

By: Agung Budiono

JAKARTA (IFT) – PT Timah Tbk (TINS) claims that it will not be affected by the government’s plan to revise Minister of Trade Regulation Number 4 Year 2007 on Export of Tin Bars, as long as the revision does not change the minimum acceptable tin content for export. Timah exports 99.85 percent-grade refined tin.
The current regulation only regulates export of tin bars and does not regulate processed and purified tin, which the government plans to revise.
The goal of the revision is to enhance the country’s processing industry and increase value added products. Another aim is to fulfill the government’s plan to encourage the establishment of more upstream industries.
Anticipating the new regulation, Timah will improve the diversification of its products by building a new Rp 250 billion-Rp 300 billion, 10 thousand ton tin-chemical plant. The plant will be situated in Tanjung Ular, Bangka Belitung.
Timah will kick-start the development of the plant this year.
The company already owns a 10 thousand ton tin chemical plant in Cilegon. The plant began producing tin chemical, which offers higher value than unprocessed tin, in  August 2010 and will start producing at full capacity this year. Timah plans to increase the capacity to 20 thousand tons in the future.
The produced tin will be exported to Taiwan, Korea and Japan.
Higher Royalty
The royalty for tin currently stands at three percent. Of the toatl royalites, 16 percent goes to the central government, 20 percent to provincial governments, 32 to regional governments and another 32 percent to regions in the straight vicinity of the producing region.
Pri Agung Rahmanto, Executive Director of ReforMiner Institute, said that the royalties that mining companies pay must be revised to follow the price of their respective commodities.
The royalty scheme, according to Pri Agung, is less beneficial than the production sharing contracts, as the royalty scheme determines royalties by subtracting costs from the revenue of mining companies, which reduces the total revenue from mining royalties.
In 2010, the total royalties the government obtained from General mining companies reached Rp 9.73 trillion, versus Rp 8.7 trillion obtained in 2009.
Pri Agung suggests calculating royalties based on the gross revenue of mining companies without reducing the total with costs.
Indonesia is the world’s leading tin exporter. Based on data from the Ministry of Trade, last year,  the country exported 92,486 tons worth US$ 1.71 billion, a 1.88 percent increase from the 90,779 tons exported in 2009.
In the first quarter, the country exported 39,288 tons, up 4.5 percent from the 37,609 tons sold a year earlier. (*)