KUALA LUMPUR – Already under fire for widespread environmental damage, Malaysia’s once lucrative bauxite mining industry is facing a likely death knell from neighboring Indonesia’s move to allow a resumption of exports.
This time last year, Malaysia was the world’s biggest supplier of the aluminum-making raw material to top buyer China, but its exports tumbled after government action aimed at reining in the little regulated industry.
The latest move could spell the end for a sector that only sprang to life in late 2014 after Indonesia banned ore exports, and illustrates the risks facing miners across Southeast Asia from increasingly uncertain government policy.
Copper giant Freeport-McMoRan Inc warned last week it could slash output from Indonesia amid a long-running dispute with the government, while the Philippines has ordered the closure of more than half the country’s mines on environmental grounds.
“Policy risk is huge in mining right now,” said Daniel Morgan, mining analyst at UBS in Sydney. “In supplier policy, you’ve got changes to Indonesia’s mining policy, the Philippines and Malaysia.”
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