Indonesia bans mineral ore exports

January 13, 2014 - 6:31:32 am

Stockpiles of nickel ore await shipment at a port in a nickel-mining area in Indonesia’s central Sulawesi.

JAKARTA: Indonesia, one of the world’s biggest resource exporters, halted all mineral ore exports yesterday in a bid to promote domestic processing, but the country’s president passed a last-minute regulation to ease the ban’s impact on major miners.

In one of his biggest economic policy decisions since taking office nearly 10 years ago, President Susilo Bambang Yudhoyono approved the ban, but allowed US mining giants Freeport McMoRan Copper & Gold and Newmont Mining Corp to continue to ship billions of dollars worth of copper overseas.

The Southeast Asian nation is the world’s biggest exporter of nickel ore, refined tin and thermal coal and home to the fifth largest copper mine and top gold mine.

The long-expected ban aims to boost Indonesia’s long-term return from its mineral wealth by forcing miners to process their ores domestically. But officials fear a short-term cut in foreign revenue could widen the current account deficit, which has undermined investor confidence and battered the rupiah.    

“Starting at midnight on Jan. 12, 2014, raw ore definitely cannot be exported,” Energy and Mines Minister Jero Wacik told reporters after a meeting with the president and cabinet.

However, Yudhoyono’s last-minute regulation will allow 66 companies, which include Freeport and Newmont, to continue to export processed mineral as they have provided assurances to the government that they will soon build the necessary smelters.

“As long as they can fulfill the requirements, Freeport and tens of national miners are still allowed to export,” Industry Minister MS Hidayat said.

Details of the regulations were to be released later.

Most of the companies expected to feel the impact of the ban are small domestic miners, numbering in the hundreds, that cannot afford to invest the hundreds of millions of dollars needed to build a smelter.

Mineral shipments totalled $10.4bn in 2012, or around five percent of Indonesia’s total exports, according to the World Bank.

Shortly before the ban took effect, Freeport halted copper exports and would not resume them until there was clarity on which minerals can be shipped, a union official said. “There will be no concentrate exports from Freeport Indonesia in Papua as long as there is no government policy providing certainty on concentrate exports,” said union official Virgo Solossa, adding that the firm has not made a shipment from its port since December 15.