Indonesia Seen Avoiding Total Ban on Mineral-Ore Exports in 2014

Indonesia may refrain from a complete ban on mineral-ore shipments in 2014 as the country needs the revenue to offset declining income from the oil and gas industry, said an adviser to the industry ministry.

Earnings from ore exports may reach $10 billion in 2013 and proceeds from mining and metals represent more than 6 percent of the national budget, Soemantri Widagdo said at a conference in Singapore today. Revenue is growing and makes a complete ban unlikely, he said. While he advises the ministry on metals policy, he said the views were his own and he wasn’t speaking on behalf of the government.

The proposed ban is part of wider efforts by Indonesia to increase the value of commodity exports and strengthen control over supply. China, the world’s biggest user of industrial metals, sourced 56 percent of its nickel ore imports and 67 percent of its bauxite needs from Indonesia in the first nine months, customs data compiled by Bloomberg show.

“In the past few years, the contribution of the oil and gas industry to our GDP has been declining and the contribution from non-oil and gas has been increasing,” said Widagdo. “We don’t want to stop exports by 100 percent.”

Most revenue this year is from exports of bauxite, nickel and copper ores, and minerals containing iron, said Widagdo. One way to avoid a total ban is to increase tariffs, he said.

While the country plans to halt ore shipments, the government is studying exemptions for mining companies that have smelters or plan to build them. The chances that Indonesia will ban sales are 50-50, according to Glencore Xstrata Plc. (GLEN)

“There’s going to be a transition plan where we are going to allow some exports obviously,” said Widagdo.

To contact the reporter on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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