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Indonesia eases export ban on nickel ore, bauxite

Indonesia eases export ban on nickel ore, bauxite

JAKARTA: Indonesia introduced new rules on Thursday that will allow exports of nickel ore and bauxite and concentrates of other minerals under certain conditions in a sweeping policy shift by the key global supplier.

A ban on unprocessed ore exports was imposed in 2014 to spur higher value smelting industries, but the government of Southeast Asia’s biggest economy has faced a hefty budget deficit and missed its 2016 revenue target by $17.6 billion.

The resumption of shipments may have been drafted to help stop the gap. The new regulations, which took effect on Wednesday, sent nickel prices tumbling more than five percent to a four-month low of $9,660 a ton before they recovered.

The rules include broad changes to permit extensions, which may now be applied for up to five years in advance of expiry, as well as new divestment requirements. Nickel miners must now dedicate at least 30 percent of their smelter capacity to processing low-grade ore, defined as below 1.7 percent nickel.

“Where, considering installed (smelter) capacity, they can’t absorb production, (ore) will be allowed to be sold overseas,” Coal and Minerals Director General Bambang Gatot told reporters. Bauxite with an aluminum oxide content of at least 42 percent may also be exported “in certain amounts” under the new rules.

Gatot said exports would be allowed for up to five years and would be restricted to volumes decided by the government and independent inspectors, but he gave no further details.

“The government is between a rock and hard place. It’s in a dire fiscal position on the one hand and allowing nickel and bauxite (exports) will help with that,” Jakarta-based foreign legal counsel Bill Sullivan told Reuters.

A mining ministry official said in October that Indonesia could export up to 15 million tonnes of nickel ore in 2017 if the ban was lifted, about one-quarter of 2013 levels.

The policy shift was welcomed by state-controlled PT Aneka Tambang Tbk, whose revenues were hit hard after Indonesia banned nickel ore exports in 2014.

“Regional economies will grow, (and) mining areas that died because of the export ban can grow again,” Antam CEO Tedy Badrujaman told Reuters.Last year, Badrujaman said Antam hoped to export 20 million tons of low-grade ore to help attract smelter project financing, around 10 times more than the ore it currently processes domestically.