Indonesia is set to revise its mining rules that could give companies up to five more years to build smelters. The revision could also allow for exports of nickel ore with a 1.8% percent metal content because it cannot be processed domestically.

The proposed changes mooted by the country’s mining minister, Luhut Pandjaitan, provide a way around a 2017 deadline for full domestic processing of mineral ores, potentially pushing it out to 2022.

Reuters reports the minister as saying, “We will provide an opportunity to companies building smelters, in the form of a relaxation ... in accordance with their smelter development progress.”

However, he said that miners failing to build smelters within five years could have their mining permits revoked.

Existing rules would prevent copper, zinc, lead, manganese and iron miners from exporting concentrates after January 2017, after which only shipments of processed metals would be allowed.

The minister said the government was also looking to possibly change rules on nickel ore with a 1.8% metal content, “because no one can process it domestically. Perhaps we will consider exporting it.”

Nickel companies fear the proposed changes could weaken metal prices, undermine confidence in the budding smelting industry and risk up to $12 billion in investments.

The Philippines took Indonesia’s crown as the world’s leading nickel ore exporter after the ban of ore shipments, and now accounts for around 25% of global mined nickel supply.

Indonesia has, however, found some compensation in shipping pig iron and this industry now worries that resuming ore exports could undermine the prices for such semi-finished and refined metals.

The executive director of Indonesia’s main smelter industry association, Jonatan Handojo told Reuters that overturning the ban would go against the wishes of most participants in Indonesia’s nickel industry.

Luhut Pandjaitan also said that Indonesia’s finance ministry was working on a progressive export mineral export tax, to be imposed in stages according to how far companies have advanced with smelter development.


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