Metal Bulletin - by Deepali Sharma
Singapore 04/10/2016 - Any revision to the Indonesian ban on exports of nickel ore will have to be well-thought-out so as not to discourage downstream investment, a government official told Metal Bulletin on Tuesday.
Indonesia is finalising an overhaul of its mining rules that could give companies up to five more years to build smelters and restart exports of nickel ore - which have been banned since 2014 - the country’s mining minister, Luhut Pandjaitan, was quoted as saying in a Reuters report on Tuesday.
"We will provide an opportunity to companies building smelters, in the form of a relaxation... in accordance with their smelter development progress," the minister said, according to the report.
Miners that fail to build smelters within five years could have their mining permits revoked, Pandjaitan added.
The relaxation will allow exports of concentrates to extend for another three to five years beyond the January 2017 deadline set under the 2014 mining law, another local report said.
Talks of a relaxation on exports have surfaced on multiple occasions this year as the 2017 deadline for copper concentrates exports looms.
Export duties will be levied based on smelter development, the reports added. The Ministry of Finance (MoF) is involved in deciding those.
Soon after banning exports of minerals in 2014, Indonesia issued a progressive export tax to regulate mineral concentrate exports and push miners to build smelters and refineries in the country.
"Some grades of nickel cannot be processed domestically and we may consider it for exports," the minister was quoted as saying.
Speaking on potential changes in Indonesia’s exports policy, a government official told Metal Bulletin on Tuesday: "Companies need the cash flow to remain committed to downstream development and this relaxation is aimed at that."
"The nickel market, however, is already reeling under low prices so we have to make a careful consideration of whether we want to release more raw material to the market," he added.
"We have seen investment in nickel pig iron projects in Indonesia and we do not want to discourage them, so it needs to be thought-out process," he said.
A decision on how the changes will be implemented is expected to be taken this month, market sources told Metal Bulletin.
Nickel prices plunged to a seven-year low below $10,000 per tonne in September last year and have traded at around those levels since.
A slight recovery has been evident since August this year amid concerns about supply from the Philippines, keeping the nickel price above $10,000.
Three-month LME nickel was last at $10,230-10,250 per tonne.
"We are already exporting NPI so I don’t think we should allow nickel ore exports but for copper concentrates a decision has to be taken this year," a member of the Indonesian Chamber of Commerce said.
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