Indonesia’s Bauxite Miners Call for Exports in Ore Policy Review

  • Shipments will create jobs, revive shipping industry: group
  • Country was top bauxite supplier to China before ban in 2014

An Indonesian producer group will ask the government to allow exports of bauxite, the raw material used to make aluminum, and grant an annual quota of 40 million metric tons, in a move that would ease the country’s ban on all raw mineral ore shipments imposed in 2014.

Permitting sales “would have a massive domino effect,” Erry Sofyan, chairman of the Association of Indonesia Bauxite and Iron Ore Producers, told reporters in Jakarta. “It would create 40,000 jobs and revive the shipping industry in Batam,” he said, referring to an island in the north of the country near Singapore. The country shipped 55 million tons of bauxite in 2013, he said, with most cargoes going to China.

The government is set to finalize revisions to the export policy next week, including deferment of the ban on processed ore exports including copper concentrates by three to five years from January 2017. Luhut Panjaitan, then acting energy and mineral resources minister, said on Wednesday the country would probably keep its moratorium on nickel ore and bauxite exports. A proposal a week earlier to ease the ban spurred opposition from smelters.

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?” Panjaitan told reporters that day. Southeast Asia’s biggest economy banned raw ore exports to stop mineral wealth disappearing overseas and to build a domestic processing industry. The country was the top supplier of nickel ore as well as bauxite to China before the moratorium.

The development of alumina refineries is trailing nickel. Only PT Well Harvest Winning Alumina Refinery in West Kalimantan province is progressing, Sofyan said on Friday. That compares with 17 new nickel projects, according to data from the Indonesian Processing & Refining Industry Association.

Well Harvest, a venture between the Jakarta-based Harita Group, China Hongqiao Group and others, plans to export 500,000 tons of alumina this year, said Sofyan, who’s a director at Harita. The company will double capacity to 1 million tons next year, he said. PT Aneka Tambang also has a chemical-grade alumina plant in Tayan in West Kalimantan.

There’s no guarantee that by allowing exports, the construction of refineries will be smoother, Director General of Minerals & Coal Bambang Gatot Ariyono said earlier Friday. Building alumina plants is costlier than nickel, he said.

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