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Indonesia ban on nickel ore and bauxite exports to stay – Officials

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.

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.

Mr Chairul Tanjung chief economic minister of Indonesia said that “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, the same rationale does not apply to unprocessed exports of nickel ore and bauxite.”

Mr Tanjung said that “Nickel is different because if you are smelting in Indonesia the added value is much higher than copper. 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. There is no way for us to go against the law. The president could be impeached by parliament if we breach the law.”

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, Mr Tanjung pointed to recent data from the country’s investment coordinating board that showed close to USD 8 billion was being spent to build three alumina refineries and two ferronickel projects.

He said that “This is creating investment in Indonesia. More projects were expected to follow which would help reduce the country’s trade and current account deficits.”

Source – Reuters


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