PT Refined Bangka Tin, Indonesia’s second-biggest smelter, has ceased operations in support of the government’s commitment to preserve the environment, and its facilities on Bangka island will become a conservation area. The move will cut exports by about 14 percent, an industry group said.
The company “has decided to close its tin refining and marketing operations for a commitment to preserve the environment and to support Indonesia’s government and President’s commitment” to the United Nations Framework Convention on Climate Change, according to a statement Tuesday from Tomy Winata, chairman of Artha Graha Network, which owns PT Refined Bangka Tin.
Artha Graha Network “wants to ensure that all business lines support the environment, including green-mining practices, and we see that our mining operations are currently far from meeting the group standard,” the smelter’s Chief Executive Officer Petrus Tjandra said by phone from Jakarta Tuesday.
The closure is the latest blow to the country’s tin industry, the world’s biggest exporter. The government has imposed curbs on production and overseas sales, tightened up on taxation and quality standards, and obliged exporters to trade the metal on a local exchange before shipping. Monsoon rains and floods have also disrupted mining and ore supplies.
Prices of tin, used in everything from electronics to packaging, have jumped 8.9 percent this year to $15,850 a metric ton on the London Metal Exchange. The metal has advanced 19 percent from the closing low on Jan. 15, just short of 20 percent which is the common definition of a bull market.
Banks to Plantations
Artha Graha Network is a conglomerate with businesses ranging from banks to plantations and mining. Refined Bangka Tin is a private company established in 2007, and has the capacity to produce 2,000 tons of refined tin a month, according to a statement on its website. Bambang Gatot Ariyono, director general of coal and minerals at Energy and Mineral Resources Ministry, said by phone that he hasn’t received a report on the closure.
The shuttering could reduce exports from Indonesia by at least 10,000 tons this year, Jabin Sufianto, chairman of the Association of Indonesian Tin Exporters, said by phone. He said the estimate was based on Refined Bangka’s past performance and its business plan. The country shipped 70,155 tons in 2015, the smallest amount since at least 2008.
The possibility of other smelters filling the shortfall will depend on their business plans and approval from the Bangka mining office, he said.
Environmental concerns have also affected the nation’s biggest tin smelter, PT Timah, which halted offshore mining last month in response to complaints from local fishermen.
Two other smelters, PT Stanindo Inti Perkasa, and PT DS Jaya Abadi, are producing at below 70 percent of capacity due to a halving in ore supplies, M.B. Gunawan, a director at Stanindo and general manager at Jaya Abadi, said by phone on Monday. At issue are government rules imposed in November that require ore to originate from licensed mines.
Both companies are “currently only exporting about 100 tons per month,” Gunawan said. The smelters expect to raise output to about 80 percent capacity by mid-year, he added.
Tin exports have dropped every year since 2013 due to stricter regulations. Shipments dropped 7.6 percent in 2015 from a year earlier, according to Trade Ministry data compiled by Bloomberg. Overseas sales plunged 57 percent to 2,486 tons last month from December, the data showed.