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

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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.

“We don’t talk about export ban, but implementing a law created by government and parliament,” Bambang, who helps to oversee mining policy, told the conference in Jakarta. “Now, we are in process of how to create regulation below the law. This is still in the process.”

The government has received 89 proposals for nickel-processing plants with potential capacity of about 50 million metric tons, Suhendra said. The plants will be located in Kalimantan, Sulawesi, Papua and Maluku, he told delegates.
Bear Market

Three-month futures for the metal used to make stainless steel climbed 0.5 percent to $13,655 a ton on the LME at 6:13 p.m. in Singapore, paring this year’s loss to 20 percent. Citigroup boosted its 2014 forecast to $17,000 from $16,375, “driven by our core view that the Indonesian export ban is essentially being mispriced,” according to the report.

The country will export 60 million tons of nickel ore in 2013 from 45 million tons last year as probable record shipments head to China this month, Kenny Ives, head of the nickel department at Glencore Xstrata Plc, told the conference.

Inventories in China alone total 30 million tons, he said.

Indonesia will probably not fully enforce the export ban before 2017, said Morgan Stanley in a report today. With surpluses staying elevated and commercial inventory rising, the bank expects nickel to stay depressed through 2015, it said.

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