Ban on Indonesian nickel ore exports to begin immediately

October 28, 2019

A ban on nickel ore exports from Indonesia that was set to go into effect in 2022 has been moved up by two years as the country’s nickel miners agreed to stop exports immediately, the country’s investment agency chief Bahlil Lahadalia said.

Exports due to be shipped from Indonesia, the world’s biggest nickel ore producer, will be bought by local smelter operators at an international price level, Lahadalia said.

“This agreement was carried out not on the basis of a letter from the government or technical ministry, but a joint agreement,” Lahadalia said. “Where the agreement is carried out by the nickel association with us the government.”

Reuters reported that Indonesia’s government in September expedited the ore export ban by two years as part of its efforts to boost expansion of a local smelting industry.

Expectations of the Indonesian ban have pushed nickel CMNI3 prices on the London Metal Exchange (LME) up nearly 40 percent to around $17,000 a tonne now. In September, they hit a five-year high of $18,850 a tonne.

Lahadalia, who was appointed by President Joko Widodo in his new cabinet, said nickel companies agreed not to export ore based on “collective awareness” to create added value to Indonesian resource exports by processing them onshore.

Nickel smelters have been having problems buying raw material for their plants since Indonesia announced it was moving forward the ore export ban to January.

China’s Tsingshan, the biggest smelter operator in Indonesia, will cut production by 20 percent starting in November due to scarcity of ore and as the rainy season begins, to maintain its levels of ore inventory, said a company official in Jakarta.

Meidy Lengkey, secretary general of Indonesian Nickel Miners Association, told Reuters that miners were fine with the export stoppage as long as the government helps to support domestic ore prices.

“We are supportive, but prices given to miners should be fair,” she said.

Miners have complained that local smelters are pricing nickel ore at much lower price compared to those exported.

The mining ministry said they will revise pricing rules to put a floor price for ore.

Photo: Backhoe load warm and smokey slag material into mining dump truck in Nickel Mining in South Sulawesi, Indonesia. - Image

 

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