Ore Export Ban in Indonesia Seen Spurring Thousands of Job Cuts

Indonesia’s planned ban on mineral ore shipments may trigger hundreds of thousands of job losses in Southeast Asia’s largest economy, an industry group said, urging lawmakers to mitigate the rule’s potential consequences.

“The most important thing is how to prevent 800,000 workers, that are directly or indirectly in the mining industry, who may be unemployed,” Natsir Mansyur, a deputy chairman at the Indonesian Chamber of Commerce and Industry, said in a statement today. Mining companies may go bankrupt, default on loans and stop making tax payments, he said.

The government wants to increase the value of commodity shipments by promoting local processing and plans to prohibit ore shipments from the largest mined nickel producer after Jan. 12. Futures surged to a one-month high in London last week on prospects for disruptions to global supply. A clear transition plan is needed to avoid adding pressure on the current account because of the ore curbs, the International Monetary Fund said in an annual country assessment published today.

“The DPR with the government and mining entrepreneurs need to find a solution on the impact,” Mansyur said, referring to the country’s lower house of representatives by its Indonesian initials. The ban may affect mining contractors, suppliers and communities living near mines, he said.

Three-month nickel traded 0.2 percent lower at $14,066 a metric ton on the London Metal Exchange at 3:22 p.m. in Singapore. The price reached $14,227 on Dec. 12, the highest since Nov. 6. Nickel offers investors the best opportunity among base metals for advances in early 2014 as Indonesia halts exports, according to Barclays Plc.

To contact the reporter on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net

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

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