Indonesia Likely to Keep Ban on Nickel Ore And Bauxite Exports

  • Easing of moratorium was opposed by domestic smelting industry
  • Govt aims to complete discussion on mineral policy next week

Indonesia will probably drop a controversial plan to allow exports of low-grade nickel ore and bauxite amid opposition from local smelters and fears that it could upset Chinese investors who’ve poured billions of dollars into the country to build processing plants.

“Most likely, there won’t be any relaxation for exports of nickel ore and bauxite,” Luhut Panjaitan, acting energy and mineral resources minister, told reporters in Jakarta on Wednesday. The country “has attracted investments of about $5 billion, including for stainless steel, so why do we need to export if we can process domestically?”

The U-turn comes about a week after Panjaitan had raised the possibility of easing the ban. The government had considered allowing ore sales with 1.8 percent nickel content or less because the material is hard to process locally and sales would help fund local smelters. Shipments of 15 million metric tons a year were possible. A final decision is still to be made and the government aims to complete discussion on the export policy next week, Panjaitan said.

The move to ease the moratorium was opposed by top domestic nickel producers Tsingshan Bintangdelapan Group, partly owned by China’s Tsingshan Holding Group, and PT Vale Indonesia, a unit of Brazil’s Vale SA. State-owned PT Aneka Tambang, or Antam, supported the move.

The government is still reviewing its policy on copper concentrates exports, Panjaitan said. The legislation currently stipulates that shipments must end from January 2017 as part of a drive to get more value from sales by encouraging miners to invest in domestic processing capacity.

Ore Costs

Southeast Asia’s biggest economy banned raw ore exports in 2014 to stop mineral wealth disappearing overseas. The country was the top supplier of nickel ore to China for use in stainless steel before the moratorium.

The Philippines ramped up production to fill the gap, but the country’s mining industry is now facing a raft of closures for environmental reasons. Indonesian sales of 15 million tons would have been almost half the 32.3 million tons shipped by the Philippines last year.

The move would have inflated local smelting costs and threatened the existence of small producers, Alexander Barus, chief executive officer of the Tsingshan Bintangdelapan Group, said last week. He called the move unwise and said it contradicted promises by the nation’s president.

Vale Indonesia said that easing the ban risked flooding the overseas market and undermining prices. The proposal had also irked some Chinese investors who had spent billions of dollars on smelters in Indonesia, according to Jonatan Handojo, vice chairman of the refining industry association.

Nickel prices advanced as much as 1.9 percent to $10,620 a ton on the London Metal Exchange on Wednesday, the highest in more than a week, and were at $10,460 on Thursday. The metal fell to a low of $7,550 in February, the cheapest in more than a decade.

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