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Nickel Laterites

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

http://in.reuters.com/

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.

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UPDATE 3-Indonesia’s mining ministry looks to ease mineral export ban – by Wilda Asmarini and Fergus Jensen (Reuters U.S. – January 8, 2014)

http://www.reuters.com/

Jan 8 (Reuters) – Indonesia’s mining ministry sought to ease a controversial mineral export ban before its Sunday deadline, but still looked set to prohibit more than $2 billion worth of annual nickel ore and bauxite shipments.

Indonesian government officials are scrambling to pass regulations to ease a ban on unprocessed mineral ore exports from Jan. 12.

The ban aims to boost Indonesia’s long-term return from its mineral wealth, but officials fear a short-term cut in foreign revenue could widen the current account deficit, which has undermined investor confidence and battered the rupiah.

“The (mining) ministry proposed that miners will be given flexibility to export concentrate or processed minerals until 2017,” Sukhyar, director general of coal and minerals at the ministry, told reporters.

“After 2017, they will only be allowed to export metal or refined mineral,” he said. The mineral ban is one of Indonesian President Susilo Bambang Yudhoyono’s biggest economic policy moves in his nearly 10 years in office.

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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.

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[Indonesian] Ore Export Ban Is Definitive, Official Says – by Muhammad Al Azhari (Jakarta Globe – January 2, 2014)

http://www.thejakartaglobe.com/

Indonesia will be consistent in banning mineral-ore exports this year, as mandated by the 2009 Mining Law, and the government regulation would set processing and purification requirements before companies can export, a senior government official said.

R. Sukhyar, the newly appointed director general of coal and mineral resources at the Energy and Mineral Resources Ministry talked with the Jakarta Globe on Tuesday, almost two weeks before the Jan. 12 deadline, to clarify the government’s stance about the mineral-ore export ban.

Reports last month said the government would set exemptions, but that is not the case, according to Sukhyar. “The law says mineral ore mined from Indonesian soil must be processed [domestically] and be purified. That’s clear, that means no more mineral-ore exports. That’s non-negotiable,” said Sukhyar, a veteran bureaucrat, who officially started his new position on Dec. 20.

The government regulation, he said, will regulate technicalities about the smelting and purification level for metals including copper, nickel, bauxite, tin, iron ore, manganese, gold, copper. It will also regulate the adding of value to non-metals, such as limestone, quartz and marble, before they can be exported.

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Nickel market may be missing the bigger picture – by Roskill Information Services (Mining.com – December 16, 2013)

http://www.mining.com/

With 2014 quickly approaching, all eyes in the market appear to be turned east to Indonesia.

As of the beginning of December, the Indonesian government has signalled that it would proceed with putting into effect a ban on unprocessed mineral ores.

Roskill’s nickel analyst, Thomas Hohne, answers some of the major questions related to the ban and its effect on the nickel market, and shares some of Roskill’s views of what other factors will be driving the nickel market in the years to come. What should we expect to happen come January 2014?

Shipments are set to be barred from January 12th onwards as proposals for a phased introduction of the ban have been discussed, but not adopted, as of yet. With Indonesia’s earnings from ore exports in the range of US$10 billion in 2013, much of which would evaporate overnight, pressure for some intermediate solution will remain. Because of this, however, any temporary solution is likely to be reached after the imposition of the ban, rather than before. Moreover, Indonesian officials have already indicated that even as the legislation will go ahead, implementation of the ban may allow for some amendments in practice.

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Indonesia’s president to weigh into mineral export confusion (Reuters U.S. – December 11, 2013)

http://www.reuters.com/

JAKARTA – Dec 11 (Reuters) – Indonesia’s president will make the final decision in a furious debate over next month’s scheduled ban on the export of unprocessed metal ore, an issue that pits nationalist-minded lawmakers against officials desperate not to lose revenue.

From next month, mining companies must process their ore before shipping it overseas, in a measure that aims to boost the value of exports from Indonesia, the world’s top exporter of nickel ore, thermal coal and refined tin. But smelting capacity is nowhere near ready, which means much of Indonesia’s output of metal ore will grind to a halt unless the processing requirements are relaxed.

And the law is kicking in just as a yawning current account deficit, exacerbated by waning global demand for commodities, is undermining investor confidence, leading to a drop this year of nearly a quarter in the rupiah’s value against the dollar.

“The president will decide it,” Trade Minister Gita Wirjawan told reporters on Wednesday, noting that Yudhoyono would make an announcement after consultations with the chief economic minister, the energy and mineral resources minister, the trade minister, the industry minister and parliament.

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

http://www.theaustralian.com.au/business

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.

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Vale Hopes to Sign Contract Soon – by Francezka Nangoy (Jakarta Globe – November 27, 2013)

http://www.thejakartaglobe.com/

Vale Indonesia, the largest nickel matte producer in the country, remains optimistic it will conclude its mining contract renegotiation with the government sooner rather than later, ahead of heated national elections next year.

Nico Kanter, president director of the company, told reporters on Tuesday that in the past two months “there has been good progress” in talks with the government.

Mining companies are required to renegotiate mining contracts as the government aims for more benefit from the mining sector as well as creating downstream industries.

“We maintain our belief that we can be the first multinational company to conclude this renegotiation,” Kanter said. “There is an opportunity to finish before the April election.” Vale Indonesia is 59 percent owned by Vale Canada, a unit of Brazil’s Vale.

Indonesia is set to hold legislative and presidential elections in April and July respectively. Kanter said that if a new contract could not be concluded before the election, there was possibility that it may be stretched into 2015.

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Eramet chief warns of crisis in world nickel market – by Agence France-Presse (Global Post – November 22, 2013)

http://www.globalpost.com/

The chief executive of French mining group Eramet has blamed oversupply in the world nickel market for steep losses at a subsidiary as China ramps up its own production, with little end in sight.

Patrick Buffet said the global overcapacity was causing Societe Le Nickel (SLN), the group’s nickel subsidiary in New Caledonia, to rack up monthly losses of 2.5 billion French Pacific francs ($27 million).

“The crisis in the nickel (market) is very, very intense and nobody expected it to reach such a level,” Buffet told reporters in Noumea on Thursday after a board meeting of SLN, the largest private employer on New Caledonia’s main island of Grande Terre.

The French Pacific territory is home to a quarter of the world’s reserves of nickel, a key ingredient in the manufacture of stainless steel, rechargeable batteries and coins.

Buffet’s warning came after parent group Eramet last month posted a 5.0-percent drop in third-quarter sales to 754 million euros ($1 billion), mainly because of slumping nickel prices.

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Japan’s nickel smelters to be hit hard by Indonesia export ban (Reuters U.S. – November 21, 2013)

 http://www.reuters.com/

TOKYO – Nov 21 (Reuters) – Japanese nickel smelters will be severely impacted by Indonesian bans on exports of unprocessed mineral ores due in January as Japan imports 43 percent of ferro-nickel materials from Indonesia, the head of mining industry body said on Thursday.

With a current account deficit at a near-record high, the Indonesian government is scrambling to ease nationalistic resource rules that were passed more than a year ago, including a ban on mineral ore exports from January 2014.

Southeast Asia’s largest economy is the world’s top exporter of nickel ore, thermal coal and refined tin, and home to the world second-biggest copper mine.

“So far, Indonesia has not come up with any specific actions to ease its new mining law. We are worried about it,” Hiroshi Yao, Chairman of Japan Mining Industry Association (JMIA), told a news conference. “If Indonesia’s export restrictions of unprocessed mineral ore go into effect next year, an impact on Japanese nickel smelters will be big,” he said.

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Indonesia Weighs Ore Ban as Citigroup Increases Nickel Forecast – by Yoga Rusmana & Eko Listiyorini (Bloomberg News – November 19, 2013)

http://www.bloomberg.com/

Indonesia will press on with a ban on raw-mineral exports next year, while signaling the curbs may be amended in practice, according to two officials who addressed a conference in the largest mined nickel producer. Prices rose.

“If we look at the existing law, yes by 2014 we are sure to implement this, but we also consider the effect and discuss it with parliament, how to deal with this,” said Bambang Adi, deputy to the coordinating minister for economic affairs.

Dede Suhendra, director of mining at the Energy and Mineral Resources Ministry, told the gathering: “We have to appreciate companies that are serious about building smelters.”

Indonesia is seeking to boost the value of commodity sales, and while a blanket ban is mandated by the 2009 Mining Law, the government may exempt companies that are operating or planning to build processing plants. Nickel is this year’s worst base-metal performer on the London Metal Exchange amid record stockpiles. Citigroup Inc. raised its nickel forecast yesterday, saying the proposed curbs are being mispriced by the market.

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COLUMN-New nickel projects ramping up…slowly – by Andy Home (Reuters U.S. – November 7, 2013)

http://www.reuters.com/

Oct 7 (Reuters) – You don’t need to look very far to understand why nickel has been the consistent underperformer of the London Metal Exchange (LME) base metals pack since the middle of the year.

The explanation comes on a daily basis in the form of the LME’s morning stocks report.

Today’s showed registered inventory rising by a net 558 tonnes to 240,408 tonnes, an all-time record high – the latest in a long series of them – as surplus units spill into exchange warehouses. Nickel is a market in chronic oversupply resulting from systemic over-production.

Supply needs to be cut if the market is to rebalance. But this market’s supply profile is complex, with at least three moving parts.

The first is China’s nickel pig iron (NPI) sector. There are still few signs that the expansion momentum in NPI is slowing. Rather, price pressures are forcing producers to switch to lower-cost technology, in effect reducing the collective cost curve.

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Vale’s Earnings Surge on Output – by Francezka Nangoy (Jakarta Globe – November 1, 2013)

http://www.thejakartaglobe.com/

Vale Indonesia, the country’s biggest nickel miner, posted a 64 percent increase in profit in the first nine months of this year on the back of rising production and improving operations.

In a statement released on Thursday, the company said that its net income jumped to $47.28 million in the January-September period from $28.94 million in the corresponding period last year. Revenue rose to $721.07 million from $693.69 million.

Vale said in the statement that its success in improving its cost competitiveness helped its financial performance “even in these challenging market conditions.”

The company, controlled by Brazilian iron ore giant Vale, is currently shifting to fueling its dryers with coal rather than the more expensive high-sulphur fuel oil. The conversion began in the middle of the third quarter. Vale consumed 608,058 barrels of HSFO at an average cost of $99.65 per barrel throughout the quarter.

That compares with 679,306 barrels of consumption in the second quarter at $100.76 average cost per barrel.

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Selling their nickel for a dime – by Shelley Marshall and Omar Pidani (Jakarta Post – October 29, 2013)

http://www.thejakartapost.com/

Shelley Marshall is a senior lecturer at the department of business law and taxation, the Faculty of Business and Economics at Monash University. Omar Pidani is undertaking a Phd at the Australian National University with a scholarship from the Indonesian Endowment Fund for Education (LPDP).

Communities on stunning Halmahera Island in North Maluku that have acted as the custodians for biodiversity for generations are being economically displaced for a nickel mine. A recent report reveals that they have been failed by weak legal enforcement processes and international human rights mechanisms, despite national and international laws that should protect them.

Halmahera Island is the site of spectacular natural beauty and biodiversity, and it is also the arena for an unfolding social tragedy. Extensive blocks of habitat still cover the island, and around 80 percent is still primary forest.

It was here in 1858 that the British naturalist Alfred Russel Wallace famously wrote to Charles Darwin, outlining his ideas on the development of new species.

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Indonesia mining at risk over export ban – by Ben Bland (Financial Times – October 22, 2013)

http://www.ft.com/home/us

Indonesia’s mining industry will collapse if the government moves ahead with a planned ban on the export of raw minerals, the country’s chamber of commerce has warned.

The southeast Asian nation, which is facing strong economic headwinds, is the biggest exporter of coal for power stations, nickel ore and tin, and a leading shipper of bauxite and copper. But on January 1 it is set to implement a law prohibiting the export of unprocessed metals as part of a drive to refine the ores and potentially generate higher margins.

Mining companies and independent economists are critical, arguing that at current depressed global prices for both raw and refined minerals, it is not a financially viable option in infrastructure- and energy-poor Indonesia, especially with no commitment to invest from the government.

The US Agency for International Development has argued that the push towards refining coupled with the ban would create few jobs and could lead to $6.3bn of lost economic benefits annually by prioritising spending on refineries with “poor commercial prospects” over investment in the country’s decrepit education, health and infrastructure systems.

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