UPDATE 2-Indonesia mineral export ban uncertainty starts to bite – by Fergus Jensen and Wilda Asmarini (Reuters U.S. – January 7, 2014)

http://www.reuters.com/

Jan 7 (Reuters) – Indonesia’s planned mineral export ban – a policy designed to force miners to process their ores domestically – is sending shudders through the economy, with a Singapore-owned nickel miner suspending operations ahead of the Jan. 12 ban.

Indonesia is the world’s top exporter of nickel ore, thermal coal and refined tin, but also has significant exports of iron ore and bauxite, both of which are likely to be stopped after Sunday.

An increase in shipments of processed minerals would bolster the country’s foreign revenue and help narrow a current account deficit, which has undermined investor confidence and battered the rupiah.

However, the move has drawn protests from small mining companies, which say they can’t afford to build smelters, as well as from international majors, including U.S. giants Freeport-McMoRan Copper & Gold and Newmont Mining Corp .

The plan has also raised fears that export earnings could be slashed in the short term as miners scramble to meet the new regulation. Mining contributes about 12 percent of gross domestic product to Southeast Asia’s largest economy.

Privately owned Ibris Nickel Pte Ltd is the first miner to announce it has put operations on hold due to uncertainty over the ban, halting its 2-million-tonne-a-year mine.

Ibris Chief Operating Officer Agus Suhartono told Reuters the company had halted operations at the start of the month and may be forced to lay off some of its 1,400 workers at its mine in Southeast Sulawesi. Ibris does not have a refinery yet, and currently exports all of its nickel ore production.

“Workers have already stopped working because there is nothing they can do,” Suhartono said.

The miner, which is part of the Ibris Group, announced plans in June to build a $1.8 billion nickel pig iron plant.

Uncertainty over the requirements of the law has added to miners’ concerns and delayed smelting plans, given varying interpretations from government officials and Indonesia’s history of backing away from controversial policies.

President Susilo Bambang Yudhoyono’s administration is working on a special regulation that will likely ease the export restrictions on companies already processing some ore domestically, although moves to water down the ban have been opposed by the country’s parliament.

For the rest of this article, click here: http://www.reuters.com/article/2014/01/07/indonesia-minerals-ibris-idUSL3N0KH1K020140107

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