INDONESIA’S Constitutional Court last month rejected a challenge from mining companies and upheld the country’s ban on exports of raw mineral ores which was imposed last January. The court ruled that the prohibition was acceptable to ensure the supply of ores to domestic smelters.
The Indonesian Association of Mineral Entrepreneurs and companies with mining business licences filed a request to seek revision of articles in the 2009 law that formed the legal basis of the ban. Chief Justice Hamdan Zoelva said the ruling was final.
Indonesia was the world’s biggest producer of mined nickel and the third-largest bauxite miner but banned raw ore shipments from January 12, 2014, seeking to spur investment in domestic processing and transform the nation into a producer of high-value metal by value adding to the raw minerals.
Nickel and aluminium prices have climbed in London helped by the curbs, which have also benefited other producers in the region, including the Philippines and Australia. Nickel futures climbed 18% in 2014 to $16,370 a tonne, the biggest increase among six base metals on London Metal Exchange, while aluminium added 9% to $1961.50 a tonne.
Newly elected Indonesian President Joko Widodo reaffirmed his commitment to the ban in November.
“This will continue to act as a restraint on Indonesia’s export revenues and therefore continue to adversely affect Indonesia’s balance of trade,” Hadiputranto, Hadinoto & Partners foreign legal consultant, finance and projects Luke Devine stated in an email before the decision.
Mining companies and their associations are still pursuing challenges to the ban through the Supreme Court, Association of Indonesia Bauxite and Iron Ore Producers secretary general Erry Sofyan told reporters.
“We believe the government can come up with a wise policy,” he said. “The law mandated the government must control output and exports, and we’re ready to be their partner. Indonesia has abundant metal reserves and there’s no need for the government to worry. We’ll present more accurate data.”
The curbs have been criticised widely by the industry for being introduced too hastily and not giving companies sufficient time to undertake the construction of value adding facilities.
There has, however, been some progress made towards new facilities with the Energy and Mineral Resources Ministry’s director general of minerals and coal R Sukhyar stating in August that the measure had attracted about $18 billion in investment commitments, mostly from Chinese investors, to build processing plants. Investors are planning to build six alumina refineries and 30 nickel smelters through 2017, according to ministry data.