Indonesia's tin industry faces smelter pressures as downstream push gathers pace

By Dominikus

Indonesia's tin industry is entering a more challenging operating environment as tighter oversight of mining activities and efforts to improve supply-chain governance increase pressure on smelters, while creating opportunities for higher-value downstream industries, according to industry participants speaking at the Indonesia Critical Minerals Conference 2026 in Jakarta on June 5.

Jakarta Futures Exchange CEO Yazid Kanca Surya said tin is no longer viewed solely as a traditional industrial commodity, as the metal is becoming increasingly important in renewable energy systems, electric vehicles, energy storage, electronics manufacturing and other advanced technologies.

He said buyers are placing greater emphasis on stable supply chains, legal sourcing and transparent transactions, while investors and financial institutions are paying closer attention to compliance, operational transparency and sustainability standards before committing capital.

Indonesia remains one of the world's major tin producers, supported by decades of industrial experience, established smelting capacity and a significant role in global tin trade. However, Yazid said the industry is undergoing a transition as the government seeks to strengthen governance and capture more value from the country's natural resources.

"Every structural adjustment creates pressure across the industry, and in the case of tin, those pressures are very real, especially for smelters," he said.

According to Yazid, one of the biggest challenges facing smelters is securing consistent raw material supply. Illegal mining continues to create uncertainty across the market, affecting supervision, pricing dynamics, operational planning and confidence in the supply chain.

Smelters face a difficult balancing act as they seek to maintain stable operations while meeting growing demands from regulators and customers for stronger compliance, better oversight and more transparent sourcing practices.

The challenge is becoming more complex as global commodity markets contend with geopolitical tensions, trade disputes, logistics disruptions, energy price fluctuations and changing patterns of industrial demand, he said.

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At the same time, Indonesia is seeking to move further into downstream processing in an effort to generate more value domestically through investment, manufacturing activity and industrial development.

Yazid said much of the country's tin industry has historically focused on upstream production and primary processed products, while higher-value activities often developed outside Indonesia.

He cited tin solder, tin chemicals and tin powder as examples of downstream products that require more advanced industrial capabilities, technology, infrastructure, financing and market development than conventional processing operations.

Indonesia is gradually expanding its downstream tin industry, while discussions are also emerging around the potential extraction of rare earth elements from tin slag.

"This development could be important, because it would show that the industry is slowly moving beyond primary processing," Yazid said.

He added that downstream development cannot rely solely on expanding smelting capacity or restricting exports. Success will depend on broader industrial growth, including stronger domestic manufacturing demand and integration with sectors such as electronics, automotive manufacturing, renewable energy and advanced technologies.

Industry participants also see opportunities for Indonesia to strengthen its role in global tin trade by developing more transparent pricing mechanisms and market infrastructure.

Separately, Erwin Setyawan, Head of Trading and Operation at the Jakarta Futures Exchange, said Indonesia has the potential to play a larger role not only as a producer, but also as a regional pricing and trading hub.

He said Asia accounts for a substantial share of global tin production, processing and consumption, yet much of global price discovery still takes place outside the region. More miners, smelters, traders and manufacturers are exploring exchange-based trading, creating opportunities for Indonesia to expand its influence in regional and global markets.

Supporting the downstream outlook, Zheyu Zhang, Tin Market Analyst at Yuntin (Honghe) Investment Development Co., Ltd., said global tin demand is expected to remain supported by growth in semiconductors, artificial intelligence applications and electric vehicles.

He noted that Asia continues to dominate global electronics and semiconductor supply chains, while Southeast Asia is attracting increasing industrial investment as manufacturers adjust supply chains in response to trade tensions.

According to Zhang, tin consumption in new energy vehicles is two to three times higher than in conventional vehicles, making the sector an increasingly important driver of future demand growth.

Editing by Reiner Simanjuntak