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Indonesia ban on nickel ore, bauxite exports to stay - officials

Mon Aug 11, 2014
JAKARTA, Aug 11 (Reuters) - Indonesia has no plans to wind
back a seven-month old ban on exports of unprocessed nickel ore
and bauxite that has led to billions of dollars in planned
investments in smelters, top government officials said.
Indonesia - previously the world's top exporter of nickel
ore and a major bauxite producer - effectively halted all but
processed metal shipments in January in an effort to force
miners to build smelters, winning the country bigger returns
from exports of its mineral resources.
Last month the government allowed a handful of firms
producing partially processed minerals such as copper
concentrate, including Freeport McMoRan Inc, to resume
exports.
However, Indonesia's chief economic minister Chairul Tanjung
said the same rationale does not apply to unprocessed exports of
nickel ore and bauxite.
"Nickel is different because if you are smelting in
Indonesia the added value is much higher than copper," Tanjung
told Reuters in a recent interview. "Because of that it's a
separate issue."
The government also lacks the power to intervene on nickel
and bauxite as the ban stemmed from a law passed by parliament
in 2009, Tanjung said.
"There is no way for us to go against the law. The president
could be impeached by parliament if we breach the law," he said.
The January ban took a chunk out of Indonesia's export
revenues just as the country was grappling with a sizable trade
deficit. It also put thousands out of work as mines shut,
damaging the country's attractiveness for investment.
However, Tanjung pointed to recent data from the country's
investment coordinating board that showed close to $8 billion
was being spent to build three alumina refineries and two
ferronickel projects.
"This is creating investment in Indonesia," he said.
More projects were expected to follow, Tanjung said, which
would help reduce the country's trade and current account
deficits.
Indonesia's Coal and Minerals Director General Sukhyar, who
will remain in his current post under Indonesia's incoming
administration following last month's election, said mining
companies had been given five years notice of the changes.
Nickel pig iron smelters could be built for as little as $10
million, Sukhyar, who goes by one name, told Reuters.
There were currently 102 nickel smelter projects at various
stages of development. "It's very promising," he said.
Sukhyar also said the government was monitoring the impact
of its processing policy on commodity prices. A government study
had found that nickel priced at around $18,000 per tonne was
ideal for the industry.
Nickel prices rose from levels below $15,000 a tonne before
the Indonesia ban, and are currently trading at just below
$18,500 a tonne.