Indonesia bans export of mineral ores

An Indonesian ban on the export of raw minerals could boost Australia’s nickel industry, but leaves some miners with assets in the Asian nation scratching their heads.

Looking to create jobs and lift GDP, the Indonesian government last week banned the export of mineral ores, and demanded that miners build refineries on Indonesian soil, rather than sending off their product to be refined elsewhere.

Following outcry from the resources industry, and fears that a total ban on ore exports would impact the economy in a negative way, the Indonesian Ministry of Energy and Mineral Resources last night released a refreshed policy, under which ore exporters would be given until 2017 to build refineries, and until then would be taxed progressively on ore exports.

The tax will start at 25%, and will escalate to 60% by December 2016, the ministry said in a statement.

The move continues a global trend of resource nationalism; it follows tightening quotas on resources in several Latin American nations, the continuing development of laws in Africa’s oil-producing states aimed at limiting foreign companies, and a growing movement in South Africa towards the nationalisation of the mining industry.

For Australia, Indonesia’s decision is a mixed bag.

Local nickel producers are enjoying an already climbing nickel price, which has risen from US$6.03/lb to US$6.57/lb in the past week.

That’s most likely driven by China’s nickel needs; its pig nickel refining industry relies heavily on Indonesian nickel ores.

BHP, which has publicly expressed its desire to get out of the nickel business, saw a healthy growth in its share price following Indonesia’s announcement, as investors speculated a better market would help the miner sell off its nickel assets.

Other local producers, like bauxite producer Alumina Limited, and nickel producers Panoramic Resources, Sirius Resources and Western Areas have also seen positive movement on the stock market, following the announcement of the ban.

But some Australian companies are worried about what the ban could mean for their own Indonesian projects.

Companies like Orpheus Energy, Indo Mines, Cokal Limited and Hillgrove Resources – along with BHP, which has its own coal developments in Indonesia – are still waiting for the dust to settle so they can find out how the new laws will affect their businesses.

Gold and copper producers with Indonesian assets, like Newcrest Mining, are reportedly safe from the bans, though, with those minerals said to be exempt from the new restrictions.

Source from here