Indonesia is considering implementing a ban on copper concentrate exports from 2023, although market participants expect it to have a limited impact on China, the world's biggest importer of the product.
Indonesian copper concentrates are mainly exported to Asian countries such as China, with small volumes going to Japan. But its exports accounted for just 2.1pc of China's total imports of 19.2mn t during January-October this year, 1.7pc of 21.8mn t in 2020 and 1.3pc of 22mn t in 2019.
"We are now calculating [the possibility] to stop exporting raw bauxite, perhaps starting next year. The year after that would be raw copper and the year after that, tin. We will continue to do this," Indonesian president Joko Widodo said at a national coordination meeting yesterday.
The country has banned nickel ore exports since 1 January 2020. China, the world's biggest importer of nickel ore, imported 23.8mn wet metric tons from Indonesia in 2019, which accounted for 42.4pc of China's total imports of the product that year.
The Indonesian policy aims to add value to and speed up the development of domestic mining industries, thereby increasing employment and revenues, Widodo said. He hopes to integrate the industrial areas for raw material processing, from nickel and bauxite to tin and copper, and transform Indonesia from a traditional resources exporter into a major producer of high-value and high-technology products such as electric cars, syringes and semi-conductor goods.
Copper concentrate supplies over the next 2-3 years are expected to be sufficient, which will significantly mitigate the impact of Indonesia's potential ban on copper exports, according to market participants. Higher copper prices in the recent two years have also encouraged some idled or old copper mines to resume runs or upgrade to expand operations.
Additionally, US-based mining firm Freeport-McMoRan, the operator of Indonesia's biggest copper mine Grasberg, has decided to build a copper smelter in east Java province. The smelter is a commitment Freeport-McMoRan made to the Indonesian government in 2018 to extend its mining rights at Grasberg. The smelter has a designed processing capacity of 2mn t/yr of copper concentrate, with construction planned to finish by December 2023.
The mining firm is also planning to build a new greenfield smelter in Indonesia with a processing capacity of around 1.7mn t/yr of concentrate. This smelter is expected to be completed as soon as feasible in 2024, subject to potential pandemic-related disruptions. Consumption of copper concentrates in Indonesia will total more than 3.7mn t/yr once this smelter is put into operation.
Grasberg, together with 2-3 other small copper mines in the country, are expected to produce 3.6mn-3.8mn t/yr of copper concentrates from 2022, Argus calculations show. This implies the country will have the ability to process all its copper concentrates into refined copper and so will not need to export copper concentrates after 2024.
