Indonesia May Reverse Nickel Ore Export Ban

- November 6th, 2019

The government of Indonesia will convene later this week to discuss the future of the nickel ore export ban.

The Indonesian government may halt the country’s ban on nickel ore exports in order to investigate rule violations

Indonesia officially banned nickel ore exports on October 28 following a summer of speculation. This ban came two months earlier than expected, given that the government had originally announced that it would take effect in 2020.

The country’s Maritime and Investment Affairs Coordinating Ministry will meet on November 7 in order to read through the results of its investigation.

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The ban was part of Indonesia’s push toward protectionist policies, with officials hoping that the move would create downstream industries in the country surrounding ore processing.

Since the ban took effect, at least 20 nickel ore vessels have been held in ports, carrying approximately 50,000 metric tons each, according to Meidy Katrin Lengkey, secretary general of Indonesia’s nickel miners association. The government did not give notification of the change, which occurred over a week ago.

Luhut Pandjaitan, the maritime and investment affairs coordinating minister, told reporters that the government would launch legal action against those caught violating ore export rules in the future. 

As Indonesia is currently the world’s largest nickel producer, speculation of the export ban caused prices to skyrocket this summer as investors and analysts alike theorized what a removal of this major player would do to the industry. Wood Mackenzie previously told the Investing News Network that the ban would directly result in the loss of 190,000 tonnes in 2021.

Jinchuan Group (HKEX:2362), a Chinese mining company, recently said it would fill the supply gap left by Indonesia’s ban using its own assets, with its General Manager Jack Zhou insisting the company’s assets could produce 180,000 metric tons of nickel.

Since news of the Indonesian ban, nickel’s price spiked slightly but has since trended downward. On October 28, the day of the announcement, the price sat at US$16,675; November 1, the price was US$16,745. The price took a nosedive after that weekend, with nickel trading for US$16,230 on November 5, a 2.67 percent decrease over the course of a week and a half. 

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Securities Disclosure: I, Sasha Dhesi, hold no direct investment interest in any company mentioned in this article.

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