Indonesia government to probe sudden surge in exports of nickel ore

In this file photo taken on March 30, 2019, a worker mans a furnace during the nickel smelting process at Indonesian mining company PT Vale's smelting plant in Soroako, South Sulawesi. PHOTO: AFP

JAKARTA - Indonesia is investigating a sudden surge in nickel ore exports and has told miners to temporarily stop them.

The world's biggest nickel ore producer is looking into whether the exports comprised only unprocessed low-grade mineral, defined as below 1.7 per cent nickel.

The country has banned all exports of higher-grade ore and is only allowing the export of low-grade mineral until the year end, in the country's attempt to get miners to build nickel smelters and thus expand local processing capacity.

Bahlil Lahadalia, chief of Indonesia's investment coordinating board, said on Monday that the country's nickel miners agreed on Monday to stop nickel ore exports immediately.

Indonesia, which also limits exports by allocating strict quotas to eligible miners, has long required higher-grade nickel ore to be processed at domestic smelters.

"Some of those shipments were allegedly not ore containing mineral below 1.7 per cent nickel," Mr Bahlil told The Straits Times on Wednesday (Oct 30), referring to the recent surge in shipments out of the country.

Mr Bahlil has also alleged that some of the recent exporters were not those building a smelter.

Indonesia in past two years issued annual export quota of 76 million wet tonnes of nickel ore to miners. At end-July, 38 million wet tonnes of the quota has been used up.

But the government today estimated the volume of shipment might have been double the allocated quota, pending its investigations.

The government has only given permits - with a certain quota for exports - to nickel miners that have begun construction of a processing plant to produce various items such as higher valued stainless steel coil.

Last month, Indonesia brought forward a ban on shipments of all nickel ore to Jan 1 next year, from 2022. The decision to bring forward the export ban last month have pushed up nickel prices on the London Metal Exchange, as smelters outside the country suddenly did not have sufficient quantities of the ore to buy.

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