JAKARTA (TheInsiderStories) – Indonesian government officially issued an energy minister’ regulation concerning on Minerals to implement the banning of export of nickel ore with content below 1.7 percent will be effective on Dec. 31.
“These steps are taken to ensure an adequate supply of nickel smelting facilities,” said the decree released on Thursday (09/04).
Previously, director general for minerals and coal at the energy and mineral resources ministry Bambang Gatot on Monday (09/2) explained the ministerial regulation regarding the termination of the provision of nickel export incentives assumes that many nickel smelters have been built in Indonesia.
A total of 11 large smelters are built and 25 are still under construction, so that Indonesia will have a total of 36 smelters.
The second assumption, the nickel export ban aims to look at nickel mineral reserves going forward. Currently nickel reserves are considered to only last for the next 8 years for proven reserves.
“Our reserves are proven or ‘mineable’ of almost 700 million tons while the estimated reserves are indeed 2.8 million but more exploration must be done,” said Bambang.
In addition, the third assumption is that there are technological developments that are considered capable of producing nickel refineries on a low quality scale.
For low quality nickel according to Bambang, it can still be processed into cobalt and lithium to manufacture batteries to support electricity transportation.
Previously, nickel price soared to its highest in five years after major producer Indonesia said it would ban the export of ore starting Jan.1, 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.
Last Friday, nickel prices on the London Metal Exchange (LME) jumped 8 percent to US$17,780 a wet ton (wt), the highest since September 2014. The price of the metal, mainly used in stainless steel, is up about 60 percent this year, far outpacing other base metals.
Its reported, Energy and Mineral Resources (EMR) minister Ignasius Jonan has signed the new regulation, especially export raw materials for stainless and batteries. In the 2019 regulation, revising Article 46 in Regulation of the Ministry of Energy and Mineral Resources No. 25 concerning Exploitation of Coal and Mineral Mining in 2018, states the reason for the prohibition of exports, namely having or are building domestic facilities.
As known, President Joko Widodo’ aimed to build electric vehicle batteries in the country to reduce fossil use.
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 that the government will comply with the rules.
Based on the regulation, five years after the rules were issued, all the miners must run the rule five years after published. He said that the mining industry is not ready to implement it because the smelter facilities are inadequate.
“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.
During January to August, China imported 17.16 million wt of nickel ore from Indonesia. As of the end of August, the outstanding quota was 38.61 million wt, with the remaining available quota of about 15 million wt, according to SMM estimates. China imported 32.65 million wt of ore from Indonesia for the whole of 2019.
Written by Marcel Gual, Email: email@example.com