Friday, June 14, 2024

Potential global tin supply disruption amid corruption cases in PT Timah

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The global tin supply is projected to be disrupted if there is a drastic decrease in production from Indonesia, one of the main producers, which is partly triggered by the domino effect of corruption cases in PT Timah (TINS).

Rizal Kasli, Chairman of the Mining Experts Association (Perhapi), said that Indonesia is among the top two tin-producing countries, with most of the production coming from the Bangka Belitung and Riau Islands.

However, there are reports indicating a decline in tin mining performance in Bangka Belitung Islands in 2024, with one of the reasons being related to corruption cases in TINS.

“We have received information about several cases being investigated by law enforcement agencies. Hopefully, these cases can be resolved soon so that tin production can resume. Improvements in tin commodity governance are needed to ensure compliance with applicable laws,” Rizal said.

Indonesia has abundant tin ore reserves and resources. According to the Geological Agency’s report in 2022, the country’s tin ore resource potential reached 7.4 billion tons, equivalent to 2.5 million tons of tin metal. 

Additionally, the estimated reserves amount to 6.9 billion tons of tin ore, equivalent to 2.25 million tons of tin metal. Despite significant reserves, most of the tin deposits are under the concessions of PT Timah.

Referring to the International Tin Association (ITA) data, PT Timah is the fifth-largest refined tin producer globally, with a production output of 15,300 tons in 2023, a decrease of 22.7 percent from 2022.

Yunnan Tin from China is the largest producer with 80,100 tons produced in 2023, representing a 3.9 percent increase from 2022.

The total production from the top 10 producers in 2023 was 219,600 tons, a slight increase of 0.41 percent from 2022. TINS contributed 6.97 percent to the total production of the top 10 tin producers in 2023.

Regarding demand, ITA estimates that refined tin consumption decreased by 3.2 percent to 376,900 tons in 2022 due to rapid post-Covid-19 pandemic inflation. The survey indicates a continued contraction in global tin demand by 1.6 percent in 2023, reaching 371,000 tons, attributed to the negative impact of inflation offsetting the technological advancements in tin for solar panels, electric vehicles, and digitization.

Various macroeconomic factors are also considered to have negatively impacted tin demand projections, reversing much of the tin demand recovery seen since 2021.

In another development, Rizal explained that PT Timah’s tin resource and reserve data are generally reliable and comply with the KCMI Code, estimated by Competent Persons in Indonesia (CPI).

“CPIs in the tin commodity are generally owned by PT Timah and some independent entities that can be used by other companies,” he said.

The certification of the Work Plan and Budget (RKAB) requires the tin resource and reserve balance to be verified by CPI. Therefore, companies without CPI must use independent tin CPI services outside of PT Timah, but the availability of such individuals is limited.

The competence development of CPIs, according to Rizal, has not been adequately addressed by mining companies, resulting in a shortage of CPIs.

Corruption case 

Member of the Housenof Representatives (DPR) Commission VII, Bambang Patijaya, confirmed the decline in tin mining performance in Bangka Belitung Islands in 2024, partly due to corruption cases in PT Timah.

Bambang emphasized that the decline in performance was not solely due to law enforcement processes but also hindered by delayed RKAB.

This occurred because the tin CPIs were implicated in legal cases, preventing the valuation of mining calculations.

“The tin commodity had 12 approved business entities. However, I received complaints that a particular individual, with the initials A, faced legal issues. He is the CPI for tin valuation calculations, but he encountered legal problems. Almost everyone used this same person,” Bambang said on March 19, 2024.

The Attorney General’s Office (AGO) through its Investigation Team at the Office of Junior  Attorney General for Special Crimes re-designated one person as a suspect in a corruption case related to tin commodity trading in PT Timah’s mining business license (IUP) for the 2015-2022 period. In total, 14 individuals have been designated as suspects.

The 14th suspect is ALW, or specifically, Alwin Albar, former Operational Director for the 2017, 2018, and 2021 periods and Business Development Director for the 2019-2020 period at PT Timah.

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