JAKARTA – A major Chinese investor in Indonesia’s smelter industry said on Friday it was considering legal action and would put on hold its expansion plans in the country, after the government abruptly reversed a ban on the export of nickel ore and bauxite.
Indonesia’s government faced a sharp industry backlash after it unveiled sweeping new rules on Thursday allowing the export of nickel ore and bauxite under certain conditions. The policy change was a blow to Indonesia’s smelting industry which took off after the country banned mineral ore exports in 2014 to spur higher-value processing.
Virtue Dragon Nickel Industry, a unit of China’s De Long Nickel Co Ltd, and other smelter operators are jointly reviewing legal steps against the Indonesian government, Virtue Dragon’s general manager Rudi Rusmadi told Reuters by telephone.
Virtue Dragon, which had invested up to 7 trillion rupiah ($525 million) to build smelters in Indonesia, is also putting on hold a further expansion plan worth 25 trillion rupiah due to the policy shift, Rusmadi said.
Chinese companies that have sunk investments into Indonesia “cannot sleep well”, Rusmadi said. “They are in a dilemma. They have invested and yet there’s no legal certainty.” A civil society group separately plans to challenge Indonesia’s new mining rules in the country’s Supreme Court, alleging they breach the 2009 mining law, one of the group members told Reuters on Friday.
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