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Indonesia holds firm on ore ban amid USD 18 billion investment

Indonesia’s ban on ore exports will remain in place under the next government as the curbs spur as much as USD 18 billion in investment in processing plants by 2017.

Mr R Sukhyar director general of mineral and coal said that mostly Chinese investors are planning at least 64 facilities to process nickel, bauxite and other metals. Investments reached USD 4.9 billion so far this year.

Nickel is the second biggest gainer among commodities this year after the largest mined producer barred ore exports to compel investments in local processing. The maintenance of the ban after presidential elections last month is pivotal to predictions for further price increases from banks including BNP Paribas.

Mr Sukhyar said that “It’s important to maintain the policy. Investors have made it clear to the government that they don’t want any change in policy because it could damage all their investments and they would lose trust.”

President Yudhoyono prohibited ore exports from Southeast Asia’s largest economy in January in a wager that investment and higher prices would more than offset job cuts and lost revenue from unprocessed shipments over time. The curb will shift the global nickel market into a deficit next year for the first time since 2010.

Source – Bloomberg

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