Miners eye Jakarta’s planned iron ore ban – by Barry Filzgerald (The Australian – December 10, 2013)


NO one is getting too excited just yet, but there is a chance that Indonesia of all places may be about to do Australia a big favour — more particularly, our tin, nickel and bauxite producers.

Like the rest of the mining sector, all three could do with a bit of early Christmas cheer. Apart from the broader fallout from the recent spying scandal and the ongoing tragedy of boatpeople, Indonesia has not exactly endeared itself to the local resources industry, with its regular shocks and horrors when it comes to security of tenure.

But if the Indonesians deliver on their big commodities threat of early 2014, much of that will be quickly forgiven. The big threat is to follow through on the government’s plans to proceed with a mineral ore export ban from January 12 — a drastic attempt to force through value-adding processing of minerals with all the attendant jobs and investment creation.

Until the recent backing of parliament, few if any observers thought the ban would see the light of day. But the fact the parliament followed through — presumably after intense lobbying by those interests opposed to the move — means mineral export market watchers are beginning to factor in the potential for the Indonesians to do what they say they are going to do.

Commonwealth Bank’s commodities desk reckons the parliamentary mandate for the button to be pushed means there has been a weakening of the counter-view that the government would water down its mining laws to protect the weak currency and to deal with its growing current account deficit.

Barclays also says it is time the markets started taking the threat seriously. It says it is clear authorities want ore processed within the country, noting that 28 companies had begun work on downstream processing facilities, and that another 100 had reportedly submitted proposals.

Assuming there is a follow through by Indonesia, it could be an interesting start to 2014 for the three commodities most affected: tin, nickel and bauxite. Indonesia is a big exporter of all three.

Barclays says the metal with the most direct leverage to Indonesian production is nickel.

For the rest of this article, click here: http://www.theaustralian.com.au/business/opinion/miners-eye-jakartas-planned-iron-ore-ban/story-fnciil7d-1226779228723#



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