Indonesia to Regulate Metal Exports for Miners With Smelters

Indonesia, the world’s largest mined nickel producer, will proceed with a plan to ban mineral-ore exports for mining companies without smelters next month, while regulating shipments by miners that do process ore.

The government will issue a regulation before the prohibition starts from Jan. 12, Energy and Mineral Resources Minister Jero Wacik told reporters in Jakarta today. The rule will provide details on the minerals that can be exported, said Coordinating Minister for the Economy Hatta Rajasa.

Indonesia is seeking to boost the value of metal shipments by promoting domestic processing. The country accounts for 18 percent to 20 percent of global nickel supplies, 9 percent to 10 percent of aluminum supply from bauxite and 3 percent of copper supply, Goldman Sachs Group Inc. estimates. Freeport-McMoRan Copper & Gold Inc. (FCX), the owner of the Grasberg mine, said Dec. 12 it was working with the government to clarify the ban.

“The government will consistently implement the Mining Law and from Jan. 12 raw minerals will no longer be permitted for export,” said Wacik. “Everyone must meet the requirements. No more ore exports. There should be refining or smelting.”

Nickel for delivery in three months climbed to a seven-week high of $14,480 a metric ton on the London Metal Exchange on Dec. 23 on concern the prohibition will reduce supplies. The metal traded at $14,326 today. Copper advanced 1.7 percent to $7,410 a ton today, the highest in four months.

Freeport, Newmont

Freeport, owner of the world’s second-biggest copper mine at Grasberg, has said it intends to abide by the terms of its contract of work, which allow it to export concentrate. PT Newmont Nusa Tenggara, a Newmont Mining Corp. (NEM) unit, is willing to discuss setting up a consortium to study additional smelting, President Director Martiono Hadianto said on Dec. 10. It runs the Batu Hijau copper and gold mine on Sumbawa island.

Wacik declined to comment on whether Freeport and Newmont, which supply concentrates, will be allowed to ship overseas.

“Regarding purity, the Law doesn’t explain the percentage,” Rajasa told reporters today. “Some purification is already done here although it’s not yet 100 percent. This will be regulated in the Government Regulation.”

China, the biggest consumer of nickel and aluminum, buys much of its nickel ore and bauxite from Indonesia. It received about 71 percent of its bauxite imports and 52 percent of its nickel ore purchases from the Southeast Asian country in 2012, RBC Capital Markets said in a report Dec. 19.

The government must consider the impact on unemployment and the possible decline in state revenue as a result of the ban, Wacik said on Dec. 20. It may trigger hundreds of thousands of job losses, according to Natsir Mansyur, a deputy chairman at the Indonesian Chamber of Commerce and Industry.

The country will maintain a tough stance on exports in the first half of next year, helping it attract more than $30 billion of domestic investment and related employment in the next three to four years, according to Goldman Sachs.

To contact the reporters on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net; Eko Listiyorini in Jakarta at elistiyorini@bloomberg.net

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

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