(Recasts, adds quotes, comment from smelter association)
By Wilda Asmarini and Fergus Jensen
JAKARTA Oct 12 Indonesia will "almost
definitely" keep in place a ban on nickel ore and bauxite
exports, the country's mining minister said on Wednesday, just
days after it had considered lifting the restriction to raise
extra cash in an overhaul of mining rules.
Indonesia banned metal ore exports in early 2014 to
encourage miners to build smelters to create jobs and shift
exports from raw materials to higher-value finished metals.
But the government has been comprehensively reevaluating the
domestic mineral processing requirements, amid concerns that the
current deadline for full processing of all minerals by 2017 may
not work for certain metals.
The government is also seeking new revenue sources, with a
fiscal deficit expected to widen to 219 trillion rupiah ($16.9
billion) this year. The mining sector accounted for almost 6
percent of Indonesia's GDP before the 2014 ban on metal ore
exports, and has since slipped to about 4 percent.
As recently as Friday the government was considering
allowing exports of bauxite and up to 15 million tonnes of
nickel ore per year, a move that would gain support from
state-owned miner Aneka Tambang, but few others in the
Acting Mining Minister Luhut Pandjaitan said on Wednesday,
however, this would be unlikely.
"We almost definitely won't give a relaxation for nickel
(ore) and bauxite," Pandjaitan said. "What would the use of us
exporting be now if we can (process) domestically."
The statement may come as a relief to investors in
Indonesia's budding smelter industry, worried that a proposed
resumption of nickel ore and bauxite exports could undermine
metal prices and put up to $12 billion in investments at risk.
Indonesia currently has 22 smelter projects at various
stages of development, Pandjaitan told reporters.
"We didn't imagine this level of progress," he said noting
that Indonesia and the Philippines control around 60 percent of
the global nickel market.
Indonesia will probably not allow exports of rare earth
metal ores either, Pandjaitan said, another apparent U-turn from
comments made last week.
Pandjaitan said he expected to provide more details on rules
for all metals next week.
Uncertainties over Indonesia's mining rules have been a
flashpoint between miners and the government for years.
Jonatan Handojo, Executive Director of Indonesia's main
smelter association, told Reuters by phone that the news would
likely support some of smelter owners who needed nickel prices
to climb above $11,000 per tonne before they became economically
"The world is watching Indonesia now," Handojo said.
London benchmark nickel is up more than 40 percent
since hitting a 12-year low of $7,550 in February, partly
supported by an environmental crackdown in the Philippines, the
top nickel ore and concentrate exporter to China.
($1 = 12,983 rupiah)
(Reporting by Wilda Asmarini; Writing by Fergus Jensen; Editing
by Susan Fenton and Alexandra Hudson)