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Andy Home: Tin prices rise as Indonesia cracksdown on illegal miners

This time, the tin supply chain is in trouble again. The government of Indonesia has started a massive crackdown on illegal mining.

The London Metal Exchange's (LME) 3-month tin price has increased to more than $37,500 a metric ton. This is the highest price since April, when the Bisie mine, in the Democratic Republic of Congo, was a supply threat. Indonesian President Prabowo Subianto said that the government wants to close 1,000 illegal tin mines on the tin rich islands of Bangka & Belitung. This is the highest price since April when the supply threat was the Bisie mine in Democratic Republic of Congo.

It is impossible to estimate how much tin these operations produce, but there could be a positive offset if the closure of such operations leads to a higher level of production in the official sector.

The price of tin is rising again because it is another drop in the cauldron that is the supply crisis.

LONG CAMPAIGN

Since the deregulation of tin production at the end the 20th century, the Indonesian authorities are struggling to regain the control over the sector.

It's difficult to distinguish between those who are operating with an official license and those who don't. The boundaries have blurred so much that PT Timah, the top producer in the country, is now being accused of facilitating black market trade. Some illegal "mines", however, are nothing more than rafts that are sent out to dredge tin at night in waters licensed by PT Timah or other operators of the official sector. The tin is then smuggled from the country in small boats. One such boat was seized by the Malaysian Maritime Enforcement Agency this week, transporting 530 sacks of tin weighing 26 tons.

Prabowo stated that the latest cracking of the regulatory whip began at the beginning of last month, and it has already led to multiple closures.

SHADOWPRODUCTION

How much tin is produced in Indonesia's shadow industry?

As such material is by definition not detected by the country's Customs Service, it exists as a statistical blackhole.

Indonesia's official export statistics capture flows of refined Tin, which is the only metal form that is supposed be shipped overseas.

Both the Chinese and Malaysian Customs Departments are recording monthly Indonesian imports. According to World Bureau of Metal Statistics, Chinese imports totaled 1,192 tons during the first eight month of the year. Malaysia imported 642 tons of "ore and concentrates" in the same period.

This could be just the tip of a very large iceberg. According to the chairman of Indonesian Tin Exporters Association, (ITEA), up to 12,000 tonnes of tin is illegally exported every year. Prabowo said that the shadow sector could represent up to 80% of the production in the Bangka Belitung area.

Estimates will always differ but there is general agreement that the problem became much worse over the past year. The illegal production boom is reducing the capacity of the official sector. PT Timah attributed a drop of 32% in ore production year-on-year in the first half 2025 to the competition with the shadow industry.

The ITEA expects a modest rebound to 53,000 tonnes this year. Last year, Indonesian exports fell to a record low of 46,000 metric tons.

In theory, the closure of illegal activities should help compensate the official sector in terms of production. However, it is unclear how much compensation and for what period.

CAULDRON

Tin price has not been waiting to find out. It has risen by 10% in the last week, as time spreads have tightened. Only a few weeks ago, the LME cash price of tin was trading at $167 below the three-month price. This week, the price has risen to $105 as shorts have been forced to purchase their positions.

The price response to the Indonesian announcement says a lot about the fragility and dependence of the tin chain on a few large producers.

One of the largest tin mining operations in the world is still not operational. Man Maw, in the semiautonomous Wa State of Myanmar, is expected to reopen after a two year absence.

The flow of raw tin materials to China is a mere trickle. This suggests that the mine has not yet reached its previous production level before the authorities closed it for an audit. The Bisie Tin Mine in Congo has been restarted after it was briefly suspended due to the M23 rebels' advance in March.

The threat is still there. No one seems to have informed the M23 that the United States is leading the effort to resolve the conflict in eastern Congo, which has lasted for decades. Kony Ng’ang’a, one of the M23 leaders, sounded uncompromising in a recent interview with CNN.

Tin traders had already enough flash points to worry about. Now they have another.

These are the opinions of the columnist, an author for.

(source: Reuters)