Indonesia nickel mining quota delays due to switch back to old system: official
INDONESIA’S mining quota distribution has been delayed, as the country has reverted to an older approval process on the back of an ongoing investigation into illegal mining, a senior official said on Monday (Aug 28).
The official also gave the assurance that there was sufficient nickel ore for smelters.
Prices of nickel ore in top global producer Indonesia have surged about 10 per cent in recent weeks, local buyers say, with ore production affected by delayed quotas, known locally as RKAB.
The office of the Attorney-General is investigating a former senior mining official, and alleged that his easing of a quota approval process led to illegal activities that caused 5.7 trillion rupiah (S$505.7 million) in state losses.
In the RKAB, the Indonesian authorities allocate each miner’s production and sales quota every year, figures which can be revised when they need more.
“The simplified approval process was considered problematic ... Rather than causing more problems, we reverted to the (old) regulation,” Muhammad Wafid, a senior official at Energy and Mineral Resources Ministry, told reporters.
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Under the old system, 27 factors need to be reviewed for a quota to be approved, compared to nine under the relaxed process, Wafid said.
In giving assurance that there was no ore shortage for local smelters, he said the quotas approved so far this year should be enough for processing needs.
Dozens of nickel smelters in Indonesia have been rushing to stock up on ore, fearing a shortage; this pushed up prices of the material, said a smelter manager, a nickel trader and Mysteel, a Chinese steel consultancy.
Some smelters are raising offers for ore by as much as 15 per cent, said a Chinese trader who buys nickel pig iron from Indonesia.
Indonesia banned nickel ore exports in 2020 to develop domestic processing industries and has successfully attracted investment into smelters producing nickel metals and nickel products used for batteries for electric vehicles. REUTERS
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