Indonesia’s mining ministry officials are working to ease a highly contentious mineral export ban ahead of its weekend deadline, but appear likely to continue with their ban of more than $2 billion in annual nickel ore and bauxite shipments. Jakarta has been struggling to pass regulations easing a ban on unprocessed mineral ore exports before Jan. 12.
The restrictions seek to boost Indonesia’s gains from its vast mineral wealth – while many officials fear short-term revenue cuts from outside investors could worsen the slumping economy. Though mining represents 15% of GDP, the Indonesian archipelago remains one of the world’s most geologically rich places, as its No. 1 exporter of nickel, thermal coal and refined tin.
“The ministry proposed that miners will be given flexibility to export concentrate or processed minerals until 2017,” said a Jakarta mining ministry spokesman quoted by Reuters. “After 2017, they will only be allowed to export metal or refined mineral;” in Q4, meanwhile, ministry officials forecast nickel output would tumble by 78% in 2014 from 2012, while bauxite would plummet 97%.
Under regulations first proposed in 2009, U.S. titans like Phoenix-based Freeport-McMoRan Copper & Gold and Colorado’s Newmont Mining Corp. will maintain copper, manganese, lead, zinc, and iron ore concentrate exports until 2017. These two represent 97% of copper production and now refine 30% of copper output domestically.
The ministry decided to keep the ban on nickel ore and bauxite because of ample domestic smelters, added the ministry official. Of Indonesia’s hundreds of nickel miners, only PT Antam and PT Vale Indonesia process their ore domestically.
And while the ban is one of President Susilo Bambang Yudhoyono signature policies after 10 years in office, it may also to stain his legacy during 2014’s elections.
The ban, moreover, could cause a significant export decline, forcing companies without smelters to lay off hundreds of thousands of workers, say analysts and Indonesian industry officials. Singapore-owned nickel miner Ibris Nickel Pte Ltd., for example, has become the the first operator to halt operations.