Malaysia is emerging as an unexpected beneficiary of Indonesia’s ban on ore exports as mining companies from its larger Southeast Asian neighbor pump cash into local bauxite deposits to meet demand from China.
At least five Indonesian miners invested in Malaysia by the end of last year, teaming up with partners to extract the ore and ship it to China, according to Erry Sofyan, chairman of the Association of Indonesia Bauxite and Iron Ore Producers. More companies may follow, Sofyan said in an interview in Jakarta.
The investments highlight the challenge Indonesia faces in trying to boost its metal-processing industry. The policy, which also covered nickel, aimed to compel investments in higher-value facilities and shipments to address concern the country was selling off resources on the cheap.
While some smelters are being built in Indonesia, the curb boosted prospects for rival suppliers, including the Philippines, Malaysia and Australia.
“Malaysia is the winner from the Indonesian export ban,” Sofyan said on Thursday. “It’s like a wakeup call for them. They finally realize that they have bauxite and that the metal has a good economical value. They see the opportunity and their exports are surging,” he said.
Indonesia was the top bauxite supplier to China before the ban was introduced in January 2014. The five companies mine in Kuantan, in Pahang state, and Kelantan in Malaysia, according to Sofyan, who declined to identify them. Permits are easier to get in Malaysia, said Sofyan, who’s also a director at Harita Group.
Bambang Gatot Ariyono, director general of minerals and coal at Indonesia’s Energy and Mineral Resources Ministry, told reporters on Friday that investments in Malaysia by Indonesian mining companies weren’t a problem.
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