Officials at top Indonesian tin exporter state-owned PT Timah have declared force majeure and ceased exports blaming new government trading rules, dealing a decisive setback to Jakarta’s attempts to boost the nation's influence as one of the world’s No. 1 producer of the metal.
Other companies, meanwhile, have also ceased exports as PT Timah has pressured policy makers to overhaul laws mandating that domestic producers trade on a local exchange — a move aimed at allowing Indonesia to establish its own benchmark pricing.
Indonesia tin producers are already stuck with an ingot ban of less than 99.9% purity introduced earlier in Q3 to boost export values. The country’s refined shipments have also hit an 11-month low of 6,465 tons, also in Q3, amid an inability by producers to meet new purity levels; consequently, Chinese buyers have looked elsewhere for preferred low-grade tin.
The new rule forces Indonesia's 47 registered tin ingot exporters to trade on a domestic exchange before shipping material abroad. PT Timah represents 30% of Indonesia's total refined tin exports, which rose almost 3% last year to 98,817 metric tons.
Though force majeure almost always applies to acts of nature, the producer recently changed its contract terms to apply under Indonesian law; the company, however, included a clause stipulating that it could call force majeure if regulator changes affected their usual shipments.