Director at the European Commission, Leopoldo Rubinacci sees European Union is possible challenges Indonesia’ planned to ban nickel ore exports to the World Trade Organization (WTO) - Photo by European Commission Office

JAKARTA (TheInsiderStories) – European Union (EU) is possible challenges Indonesia’ planned to ban nickel ore exports to the World Trade Organization (WTO), amid concerns about supply shortages for steelmakers in the region, foreign media reported today (09/25). As known the country will implement the rule starting Jan. 1, 2020.

A director at the European Commission, Leopoldo Rubinacci rated, Indonesian decision could harm steel industry, caused nickel ore is used to produce stainless steel. In his views, Indonesian products could part of EU’ import quotas to prevent a controversial United States (US) tariff on foreign steel from diverting shipments to the European’ market.

While, Chinese’ general administration of customs report showed that Indonesia’ nickel ore export to China rose about 27 percent in August from a year earlier. China is the world’ largest producer of stainless steel.

The second largest economy in the world imported 5.72 million tons of nickel ore and its concentrate in August, up 5.5 percent from July but down 7.5 percent from a year earlier. Of the total, Indonesia export 1.61 million tons of nickel from last year 1.27 million tons, but down 8.4 percent from the previous month.

Then from the Philippines, China imported 3.99 million tons of nickel ore, jumped 13 percent from 3.52 million tons in July, but down 16.8 percent from August 2018. Some experts reported that Philippine’ nickel miners were likely to increase output in 2020 caused their supply could not be comparable to Indonesia’ higher-grade ore and would not fully fill the supply gap.

Early September, nickel price soared to its highest in five years after major producer Indonesia said it would ban the export of ore in 2020, two years earlier than planned. The top global source of nickel ore wants to raise higher export revenue and tackle the current account deficit.

Indonesian government ensured that after 41 smelters operating, the country will stop raw minerals export in 2022. So far, most of the miners still export the raw products to finance their operations.

The director general at the energy and mineral resources ministry, Bambang Gatot Ariyono revealed, the rule only for nickel ore while exports of bauxite and copper concentrates can continue until 2022. He also assured, even the implementation late based on the law Number 4 Year 2009 about Mineral and Coal the government will comply with the rules.

“The prohibition policy will only be implemented until 2022,” he said.

Therefore, Ariyono believe starting 2022, Indonesia will not export raw minerals anymore and the downstream projects can be carried out optimally. He added, that in 2022 Indonesia is expected to produce semi-finished products from copper, nickel, alumina, iron, tin, gold, silver to complement the entire supply chain of domestic industrial trees.

Based on the ministry data, there are 41 units of smelters operating in 2022 ,consisting of 22 nickel smelters. In details, six bauxites processing, four iron smelters, four lead and zinc plants, copper and anodic mud, each of two factories and one smelter smelter.

It is known that currently there are 20 smelters operating in Indonesia consisting of copper, nickel, bauxite, iron and manganese smelters. PT Smelting is the only processing plant and smelter. The facility is working on copper concentrate from PT Freeport Indonesia  mine in Papua.

Initially, ore exports were originally banned in 2014. In 2017, Indonesia announced that it was in a position to allow nickel ore to be exported-only those with a nickel content of less than 1.7 per cent.

China’ laterite nickel mines are all dependent on imports, mainly from the Philippines and Indonesia. From 2012 to 2013, Indonesia was China’ largest supplier of laterite nickel, which accounted for more than 50 percent of the country’ total supply of the ore.

Philippines monopolized China’ supply of laterite nickel mines after Indonesia banned exports in 2014. Suddenly, On Jan 12, 2017, Indonesia announced that it was in a position to allow nickel ore exports, and the amount of nickel ore imported by China from Indonesia gradually recovered.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com