Indonesia to ban bauxite exports from June 2023

Market: Metals
21/12/22

Indonesia will ban exports of bauxite — a key feedstock for aluminium production — from June 2023, president Joko Widodo said today.

Indonesian bauxite mainly flows into China. China imported 18.1mn t of bauxite from Indonesia over January-November, accounting for 15.6pc of China's total bauxite imports in the first period, according to customs data.

The bauxite export ban had been on the cards since last year, as Indonesia looks to add value to and speed up the development of domestic mining industries, so increasing employment and revenues.

"We are now calculating [the possibility] to stop exporting raw bauxite, perhaps starting next year," Widodo said on 24 November 2021. "The year after that would be raw copper and the year after that, tin. We will continue to do this."

Widodo again hinted at more export bans in the latest announcement. "Exports of raw materials will continue to be reduced, downstream industries based on natural resources in the country will continue to be increased," he said.

Indonesia has banned nickel ore exports since 1 January 2020. China, the world's biggest importer of nickel ore, imported 23.8mn wet metric tonnes from Indonesia in 2019, which accounted for 42.4pc of China's total imports of the product that year.

The nickel export ban has enticed many Chinese firms to invest in processing plants in the country to produce stainless steel materials like nickel pig iron (NPI), ferronickel and refined nickel, as well as battery materials comprising nickel-cobalt mixed hydroxide precipitate and nickel matter.

As a result of the nickel ore export ban, the value of nickel exports rose 19-fold from only $1.1bn at the end of 2014 to $20.9bn in 2021, said Widodo. "My estimate is that this year it will hit more than $30bn. This is just one commodity," he added.

The World Trade Organisation on 30 November sided with the EU in a dispute brought by the bloc against Indonesia's ban of nickel ore exports. The country has decided to appeal to keep the policy in place for "realising the sovereignty of natural resources and increasing added value in the country."

The country's authorities reiterated in early 2022 and then in July and November that they would impose an export tax on low-grade nickel including ferro-nickel and NPI. But the tariff policy will likely only be imposed in two years for various reasons, said market participants.

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