Some Indonesian tin producers may face higher fuel costs from this month. Bloomberg reported that Energy Minister Jero Wacik said that from 1 September vehicles used in mining and plantations will not be allowed to use subsidized gas and oil. However he said that smallholder plantations that own less than 25 hectares of land and traditional miners will still be allowed to use the subsidized fuel. Fuel can account for up to 50% of cash operating costs for the small-scale mines which account for around three-quarters of Indonesian mine production.
Indonesian sources contacted by ITRI told us that the new ruling could affect supplies of cheap fuel to some industrial scale private mining companies which currently obtain heavily subsidised diesel via retail fuel stations. The largest mining companies, PT Timah and PT Koba Tin, and most private smelting companies have had to pay full price for fuel since 2006. Many very small-scale operators will most probably continue to take advantage of the subsidised prices to the general public at retail outlets. It is not clear yet whether the new measures will adversely affect production, as the impact will depend on how the new regulations are monitored and enforced.
