Indonesia Wants to Keep Commodity Refining at Home

The nation plans to graduate from being a commodity economy
Excavators strip the overburden to reach tin ore in the mine pit at the PT Timah operations in Sungai Liat, Bangka Island, Indonesia, on Nov. 19, 2013 Photograph by Dimas Ardian/Bloomberg

Indonesia has an unusual message for China: Stop buying our raw minerals. Indonesian mines account for about 16 percent of the world’s mined nickel supply and about 18 percent of its bauxite, used to make aluminum. China has been importing ever-larger amounts of these and other minerals from its Asian neighbor. Yet the more the Chinese buy, the angrier the Indonesians have become. Because China buys the raw rocks and does its own processing, it is depriving Indonesians of jobs and tax revenue. More than 271,000 metric tons of nickel were mined in Indonesia last year, but only about 16,000 tons were processed inside the country, according to Bloomberg Industries. For the same period, China refined almost 565,000 tons of nickel, which is used to make stainless steel. Through much of last year, China stockpiled Indonesian nickel and bauxite to hedge against any action on exports the government in Jakarta might take.

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