A plan by Indonesia to allow shipments of raw mineral ores would inflate local smelting costs and threaten the existence of small producers, according to the head of a Chinese-Indonesian venture, who called the move unwise and said it contradicted promises by the nation’s president.
Easing the export ban would mean local processors would have to compete with foreign buyers for supplies, raising the price of nickel ore, according to Alexander Barus, chief executive officer of Tsingshan Bintangdelapan Group. The company, partly owned by China’s Tsingshan Holding Group, may surpass PT Vale Indonesia this year as the largest nickel producer in the country.
The government could allow 15 million metric tons a year of low-grade ore exports because the material is hard to process locally and the money will help fund the building of local smelters, according to Teguh Pamudji, secretary general at the Energy & Mineral Resources Ministry.
The country may permit a similar amount of bauxite sales. The plan has sparked opposition from Vale Indonesia, a unit of Brazil’s Vale SA, and the Indonesian Processing & Refining Industry Association. State-owned PT Aneka Tambang supports the move.
“President Joko Widodo, when he opened our smelter, promised that there won’t be any more ore exports,” Barus said in a phone interview Oct. 7. “The mining law says exports are allowed for processed and refined products only, so exports of ore are against the law. It’s very unwise to lift the ban now, when many smelters have started to ramp up production.”
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