Base Metals

Major Miners Embrace Indonesia Nickel Ore Export Ban

Base Metals

A few big names in the mining scene are excited about the expansion potential behind Indonesia’s plans to implement a nickel ore export ban.

While news of Indonesia’s plans to implement a nickel ore export ban next year have left some investors rattled, a few big names in the mining scene are excited about the expansion potential it presents.

Announced earlier this month, the world’s largest producer of nickel is docketed to ban ore exports starting January 1, 2020. The ban had originally been set to kick off in 2022, but was bumped up by two years in an effort to expedite smelter building within the country and force miners to process ore domestically.

Once the ban was officially declared, concerns about the future of nickel supply began to surface. Wood Mackenzie estimated the ban would directly result in the loss of 190,000 tonnes in 2021, and added that they didn’t believe increased production elsewhere could make up for the shortage.

As Indonesia is working to have 36 domestic nickel smelters by 2022, some companies are stepping up to the plate with investment game plans. Speaking at the Asian Nickel conference this week, many mining hotshots were optimistic about the ban helping develop Indonesia’s nickel processing industry.

“For Vale (NYSE:VALE), we see Indonesia as a great opportunity to expand our production,” Steven Brown, a general manager at PT Vale, said at the conference.

Also adding his opinion to the mix was Mark Selby, principal of Selby & Co.

“If we step back and look at whether this has been a successful industrial policy for Indonesia, I think the answer to that is a resounding yes,” he said.

“Tens of billions of dollars for investments coming into Indonesia, probably more in mining investment than any other developing country in the world, as a result of the ore ban. Mining resources are not infinite.”

Part of Indonesia’s export ban being bumped up was also due to the country wanting to maintain ore reserves. At the time of the announcement, Coal and Minerals Director General Bambang Gatot Ariyono said the country has an estimated nickel ore reserve of 2.8 billion metric tonnes. However, he noted that proven reserves fall between 600 to 700 million tonnes.

The country has also been keen to contribute to various nickel-heavy sectors such as the electric vehicle market, stainless steel production and nickel pig iron. Earlier this year, it was reported that nickel was on its way to overshadowing palm oil as the country’s second-largest export.

As of September 11, nickel was trading at US$18,320 per tonne on the London Metal Exchange.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.


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