Indonesia hopes that four new smelters will be completed in 2016, a mining ministry official said recently. This is about half of an earlier smelter target set for this year.
The official’s statement comes as low commodity prices continue to create financial problems for Indonesia’s mining industry and shrink government returns.
Indonesia banned shipments of raw ore in early 2014 to encourage firms to build smelters and shift exports from raw materials to higher-value finished metals. However, the ban has taken its toll on the country’s mining industry at a time when it could least afford it.
It has also taken a toll on Indonesia which was the world’s top nickel ore exporter at the time of the ban and a major supplier of bauxite and copper. It is believed to have cost Indonesia billions of dollars in lost revenue.
Dozens of smelter projects have been delayed, many of them in nickel, as a result of the downturn in commodity prices, and only five nickel smelters of a targeted 12 were completed last year.
“In 2016 we hope four additional smelters will be operational,” Coal and Minerals director General Bambang Gatot told reporters on March 16. They will process nickel, alumina and lead.
The government’s non-tax revenue from mining missed its target by 43% in 2015 and could remain flat in 2016, also below target, he said.