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UPDATE 1-Indonesia unlikely to relax ban on nickel ore and bauxite exports-minister
October 12, 2016 / 2:57 PM / a year ago

UPDATE 1-Indonesia unlikely to relax ban on nickel ore and bauxite exports-minister

(Recasts, adds quotes, comment from smelter association)

By Wilda Asmarini and Fergus Jensen

JAKARTA, Oct 12 (Reuters) - 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 industry.

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 viable.

“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

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