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Kamis, 22 Desember 2022

Indonesia's Jokowi bans bauxite exports from June, China likely hurt


JAKARTA -- Indonesian President Joko "Jokowi" Widodo on Wednesday announced a ban on exports of another mineral, this time bauxite, as Widodo remains steadfast in his drive to develop a domestic mineral refining and processing industry.

"The government is committed to continually building sovereignty in our natural resources sector and add value to domestic [products] in order to open as many jobs as possible, increase foreign exchange [revenue] and create an even economic growth," the president said while announcing the policy at the presidential palace in Jakarta.

He said the ban on exports of bauxite, the world's primary source of aluminum, will take effect in June.

Widodo expects the move to increase the value of the country's bauxite-based exports from around 21 trillion rupiah ($1.35 billion) to at least 62 trillion rupiah.

Aluminum is widely used in kitchen utensils, window frames, building materials, aircraft and a huge variety of other products.

Indonesia was the world's fifth largest producer of bauxite in 2020 and had the sixth-most reserves, according to the U.S. Geological Survey.

This will not be the first time for the resource-rich country to prohibit bauxite exports. Indonesia first slapped restrictions on exports of the mineral in 2014, causing a significant drop in shipments, before relaxing the ban in 2017.

China had been the single biggest importer of Indonesia's bauxite for several years leading to the first ban, with 99% of the shipments going to China in 2014. Although China has reduced its dependence on Indonesia for bauxite it has been buying more and more from the country since the 2017 relaxation. China last year sourced nearly a fifth of its overall aluminum ore and concentrate imports from the archipelago.

Airlangga Hartarto, the coordinating minister for economic affairs, said that for many years most of the bauxite mined in Indonesia has been shipped to other countries such as China and Australia, and that Indonesia then buys refined products from these economies.

Hartarto said four refineries in Indonesia now use bauxite as feedstock with a combined production capacity of 4.3 million tons of alumina, an intermediate product. Preparations are ongoing to build several other facilities that will more than double that capacity. Hartarto added that Indonesia's bauxite reserves are estimated to be enough to support 90 to 100 years of production.

Meanwhile, Indonesia has also banned nickel exports, first in 2014 for three years, which has spurred an influx of Chinese investment into the country's nickel processing industry, with dozens of Chinese smelters now operating mostly on Sulawesi and Halmahera islands. This has turned Indonesia into a major stainless steel producer in the past few years. In addition, a growing number of facilities are being built in the archipelago to process nickel ore into a material for electric vehicle batteries.

Indonesia is the world's largest producer of nickel, which is also an essential component of stainless steel.

The latest nickel export ban, which took effect in January 2020, triggered a World Trade Organization dispute that the European Union ended up winning on Nov. 30, when the trade body ruled the restrictions were not justified.

The EU had argued that the ban was hurting its stainless steel industry.

The bauxite announcement comes despite Indonesia's recent WTO defeat. Jokowi has said his government will appeal the ruling. On Wednesday he made it clear Indonesia will keep pursuing its policy to restrict exports, saying the government will announce another export ban affecting one or two other commodities. Previous statements by government officials, including Jokowi, suggest exports of tin and/or copper might be banned.

"For other commodities, we're calculating them all -- the industries' readiness. As soon as they're half ready ... we will immediately cease [exports]," the president said.

"Even though we're being sued, no problem," he went on. "The nickel [ban] has [gotten us] sued, and what we're announcing might [get us] sued, too, but that's fine. Our duty is to look for added value as much as possible."

Widodo said the nickel ban has successfully boosted the value of Indonesia's nickel-related exports, to $20.9 billion last year from $1.1 billion in 2014, when Indonesia shipped only nickel ore. Jokowi said the figure is predicted to reach over $30 billion this year.

Indonesia this year also temporarily banned shipments of coal and palm oil, creating commotion in those markets.


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