COLUMN-Uncertainty the only certainty with Indonesia mineral export ban – by Clyde Russell (Reuters India – January 9, 2014)

Jan 9 (Reuters) – The key point with any laws or regulations is not that they are on the statute book, it’s whether they are applied and enforced, and this will be the case with Indonesia’s ban on metal ore exports.

As is often the case with Indonesia and government policy, the only certainty is uncertainty and whether the prohibition on exporting unrefined ores goes ahead, and in what form, is far from clear.

In the case that the ban goes ahead as planned from Jan. 12, it seems likely that nickel ore and bauxite, with a value of up to an annual $2 billion will be the hardest hit. Indonesia is the world’s biggest exporter of nickel ore and supplies about two-thirds of top buyer China’s imported bauxite.

But Indonesia’s mining ministry is seeking to pass regulations to ease the ban and phase in the requirements for domestic processing over a longer period of time. The proposal recommends that raw mineral ores can be exported until 2017, after which all would have to undergo domestic processing.

It must be pointed out that this proposal still needs the approval of President Susilo Bambang Yudhoyono, who is believed to be supportive of the changes.

But it also may fall foul of Indonesia’s parliament, which has taken a fairly hardline stance that miners must beneficiate locally in order to meet a policy goal of keeping more of the Southeast Asian nation’s mineral wealth within its borders.

What is happening currently is that all sides in the debate are lobbying as hard as they can, often with the effect that a muddied picture is presented.

Take the warning that as many as 200,000 bauxite miners will lose their jobs, issued on Jan. 8 by the Indonesian Chamber of Commerce and Industry.

This is most likely a worst-case scenario, which is unlikely to occur, but does make for headlines and puts pressure on the government to ensure that bauxite, which is used to make alumina and then aluminium, can continue to be shipped overseas.

If 200,000 bauxite miners were thrown out of work, the political ramifications would be profound, so the end result is that at some point a compromise will be reached.

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