PAYNE INSTITUTE COMMENTARY SERIES: COMMENTARY

By Andrew Bauman, Jason Gustely, Ian Lange and Brad Handler

March 25, 2026

Tin is a crucial component of semi-conductors and other advanced technologies powering the world. Artisanal and small-scale miners (ASM) in Indonesia, who provide as much as 12% of global supply, have a significant opportunity to benefit from the strong tin demand. However, ASM tin mining exacts a heavy environmental price, including to the coasts, and make the livelihoods of fishermen in these regions far more challenging. Since 2024, the Indonesian government has taken several steps to increase its take and control over processing, as well as to combat illegal production and raise benefits sharing with miners. Yet far more can be done to develop a legal and financial system that integrates ASM production for equitable and environmentally responsible development.

INDONESIA ASM IS A TOP TEN GLOBAL PRODUCER OF TIN

Tin’s primary use is as solder for semiconductor and electronics manufacturing; it is also used for tin plating for industrial packaging and as an input in alloys. Demand growth is expected, in part from data centers that are powering artificial intelligence development — estimates for tin demand growth range from 15 to 25% by 2030. Pricing appears already to be reflecting tightness, reaching $45,000 – $50,000 per ton this year vs. a prior 10-year average of $25,000.

Figure 1: 10 Year Tin Prices (USD/mt)
Source: International Monetary Fund

As for potential supply, large scale commercial sources of tin are not well positioned to meet this demand growth. Based on a survey of announcements from the ITA, two commercial scale mines have begun or expanded operations in the last five years. Mpama South, in Bise, DRC, added 8,000 metric tons of tin of annual production in 2024. The Penouta mine in Ourense, Spain, was shuttered during start-up due to suspended permits. Instead, it is reasonable to expect that medium term supply growth will be led by artisanal mining. Global tin ore production was 300,000 metric tonnes (mt) in 2024. China is the world’s largest tin producer, with 69,000 metric tonnes (mt) in 2024, followed by Indonesia, with 50,000 mt in 2024.

An estimated 40 % of the world supply comes from ASM, coming largely from Southeast Asia. Indonesia is believed to be one of the most dependent on ASM production. Estimates of the extent to which the country relies on ASM vary widely, from 40 to 80%, as a result of inconsistent and opaque reporting by the majority (65%) government-owned mining company PT Timah and independent smelters. Nevertheless, available information appears to support ASM contribution at the higher end of that range.

Tin concentrate is commonly bought by Indonesian metal smelters at a feed grade of 70% tin by weight. Comparing the refined tin metal production from PT Timah’s annual report to their reported concentrate production shows that at least 25-30% of PT Timah’s needed concentrate was bought from artisanal miners in 2024. Further, other Indonesian smelters are believed to rely exclusively on ASM tin. Combining these puts the ASM contribution at 70 to 75% of Indonesia’s tin concentrate production (see Table 1). This, in turn, suggests that Indonesia ASM is the world’s 7^th largest producer with 10-13% global market share.

Table 1: Implied ASM share of produced tin concentrate, 2024
Source: PT Timah and ITA Annual Reports

INDONESIA TIN MINING BACKGROUND
Indonesia’s production goals are guided by plans from the Ministry of Energy and Mineral Resources (ESDM). Permitting is broken into private land concessions and public areas open to licensed small-scale miners. Wilayah Pertambangan Rakat (WPR), People’s Mining Areas, are public lands set aside for mineral production through a regional permitting process. The region of Bangka and Belitung — which contains over 90% of Indonesia’s tin reserves and current production — has 123 WPR areas with a total acreage of 8,568 hectares, the most acres in WPR’s (across all minerals) in Indonesia.

To legally mine on WPR lands, individuals or co-ops need to file for an individual permit, known as a Izin Pertambangan Rakat, (IPR).  Producing under an IPR protects the miner’s equipment and production from seizure either by law enforcement or those with political backing.  IPR’s set annual limits on the size one individual or co-op can exploit. However, there are substantial upfront costs to get an IPR permit — industry estimate the average cost at 275 million Indonesian rupiahs, which is ~3.5x the average annual mining worker salary. Thus, the current cost structure of the IPR is unrealistic for the majority of ASM producers and prevents producers entering the legal market.

Private land concessions are handled through Wilayah Izin Usaha Pertambangan (WIUP) permits which operate very similarly to industrial mining permits. These must be renewed every year through the Rencana Kerja dan Anggaran Biaya (RKAB) system. The RKAB, Coal and Mineral Work Plan, system is the federal government’s main tool to guide mineral and coal production in Indonesia. For tin mining, the RKAB is being used to force more of the nation’s tin production through PT Timah.

ENVIRONMENTAL IMPACT
Environmental damage resulting from tin mining in Bangka & Belitung has been well documented. Erosion from onshore operations and habitat disruption caused by offshore dredging are affecting communities reliant on subsistence fishing in seagrass meadows surrounding the two islands that are productive ecosystems for shellfish and fish. Tin mining around these areas is driving an increase in sediment pollution and decrease in species diversity. Interviews with local fishermen back up this research as they explain having to travel further than previously required for inferior catches. Even with the existing reclamation standards, tin mining threatens the long-term viability of Bangka & Belitung’s agricultural sector. The studies conducted by the Universitas Islam Indonesia show that previously productive soils, once mined and reclaimed, are dominated by sand and lack nutrients.

GOVERNMENT STEPS TO CONTROL THE MARKET
The Indonesian government has recently been attempting to extend their control over tin mining, with a focus on realizing more of the value across the value chain. Most conspicuously, it engaged in an anti-corruption crackdown across PT Timah and independent smelters in 2024; assets seized in 2025 included 6 smelters, which were given to PT Timah. The smelters are expected to return to production in Q1 2026.

The effort has included promises of greater value sharing with mining communities. In October 2025, the governor of Bangka & Belitung announced that PT Timah would raise its purchase price for 70% tin concentrate from 200,000 rupiah to 300,000 rupiah. Their stated motivation was to create a more equitable distribution of the profits from the high prices. And the ESDM, in cooperation with the Indonesian House of Representatives and PT Timah, is working on a process/algorithm to create a floating purchasing price, Minimum Principle Price (HPM), for concentrate bought by PT Timah. Officials involved in the process have said that the HPM will take into account tin price as well as mining input costs. The HPM providing ASM will current prices based on the market will make PT Timah a more attractive/consistent place to sell their product, increasing the government’s share of the market.

The government is also taking steps to expand and formalize the environmental regulations and reporting requirements. Starting on Oct. 23, 2025, the Ministry of the Environment issued a new regulation, MoE Reg.20/2025. This regulation lays out monitoring requirements and the framework to determine if an area has been damaged by mining. Based on surface disturbance, water quality and loss of vegetation, communities now have a formal way to hold mine owners accountable for their operations. The monitoring requirements require operators to submit environmental assessments and mitigation plans prior to production. Whether small scale miners participate in the new reporting system or continue to operate in a gray market has yet to be seen.

Indonesian ASM will play a crucial role in the global tin supply for decades to come. The demand from the semiconductor, energy, and automotive industries and the challenges large scale mining has faced in justifying new commercial tin mines points to a persistent structural supply deficit. Increased government involvement through PT Timah has the opportunity to share value equitably and protect against environmental degradation. There is still limited uptake across the ASM communities on these islands of the existing legal framework. The recent steps alone will not be enough to carry this formalization momentum to the finish line.

We wish to thank Brian Scott for background information and pointing us in the right direction.

ABOUT THE AUTHORS

Andrew Bauman, MS in Mineral and Energy Economics, Colorado School of Mines
Joining the Payne Institute in 2025 as a Graduate Research Assistant, Andrew Bauman brings 5 years of experience as a mining engineer developing and constructing mining projects around the US. He has written on support mechanisms for domestic critical minerals production.

Andrew holds a BS in Mining Engineering from South Dakota School of Mines and Technology.

Jason Gustely, MS Mineral and Energy Economics, Colorado School of Mines
Jason Gustely is a Graduate Research Assistant at the Payne Institute for Public Policy and an M.S. candidate in Mineral and Energy Economics at the Colorado School of Mines. He brings a background in finance, investment analysis, and multilingual research support. Jason holds a BS in Economics from the College of Wooster.

Brad Handler, Payne Institute Program Director, Energy Finance Lab, and Researcher
Brad Handler is a researcher and heads the Payne Institute’s Energy Finance Lab. He is also the Principal and Founder of Energy Transition Research LLC. He has recently had articles published in the Financial Times, Washington Post, Nasdaq.com, Petroleum Economist, Transition Economist, WorldOil, POWER Magazine, The Conversation and The Hill. Brad is a former Wall Street Equity Research Analyst with 20 years’ experience covering the Oilfield Services & Drilling (OFS) sector at firms including Jefferies and Credit Suisse. He has an M.B.A from the Kellogg School of Management at Northwestern University and a B.A. in Economics from Johns Hopkins University.

Ian Lange, Professor, Economics and Business, Colorado School of Mines
Ian Lange is the Viola Vestal Coulter Chair of Mineral Economics at the Colorado School of Mines. Additionally, Ian serves as Chair of the U.S. Commodity Futures Trading Commission’s (CFTC) Role of Metals Markets in Transitional Energy Subcommittee. He is a member of the Colorado Governor’s Revenue Estimating Advisory Committee. Previously Ian has served as Senior Economist for Energy at the Council of Economic Advisors for both the Trump and Biden administrations as well as spending time at the U.S. Environmental Protection Agency and the U.S. Department of Energy.

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