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Indonesia vows to stick with ore export curbs as metals sink
[JAKARTA] Indonesia won't flip-flop on its mineral-ore export ban even as prices of metals languish at multiyear lows, with President Joko Widodo reaffirming his government's full support for the policy that's designed to compel investment in processing capacity.
"The message that we got from the president was quite clear," Totok Hari Wibowo, an official at the Coordinating Ministry of Economic Affairs, told a nickel-industry conference in Jakarta on Tuesday.
"The government will not relax the ban," said Mr Totok, head of development and facilities optimization for the economic area.
Southeast Asia's largest economy halted the export of raw minerals, including nickel, copper ore and bauxite, in January 2014 to spur investment in facilities that produce more valuable commodities. Since then, metals prices have slumped amid concern that China's slowdown will hurt demand while rival nations including the Philippines and Australia moved the fill the gap. After the curb went into effect, Indonesia has attracted US$2.4 billion in metals investments, R Sukhyar, chairman of the Indonesian Smelter & Mineral Processing Association, told the conference.
"I've asked the government not to even talk about the idea of relaxing the ban because just talking about it can create volatility," said Mr Sukhyar, former director general of coal and minerals. "It's very sensitive."
Slumping Price Indonesia used to be the world's biggest supplier of mined nickel, which is used to make stainless steel. Three-month refined futures dropped from US$13,900 a metric ton on the London Metal Exchange at the end of 2013 to as low as US$9,100 last month. The benchmark was at US$9,740 a ton on Tuesday, 36 per cent lower this year.
"Uncertainty regarding the ore ban is a very big factor and hopefully they don't do any flip-flops," said Macquarie Group Ltd's Jim Lennon, who forecasts that the global nickel market will swing to a deficit in 2016.
"It's a slow start," Mr Lennon told reporters at the conference.
"The Indonesian smelters, they need about a US$15,000 nickel price to break even. So when we see a nickel price of US$10,000, it's not very encouraging."