Vale Indonesia Shares Plunge After Easing of Nickel Ore Export Ban


JANUARY 13, 2017

Jakarta. Indonesia's move to ease a ban on the exports of nickel ore and bauxite sent shares of Vale Indonesia plunging on Friday (13/01)  as analysts said the miner is expected to be hurt by a fall in global nickel prices.

Vale shares fell as much as 15.6 percent to Rp 2,490, the biggest intraday percentage loss since October 2008. Around 111 million shares were traded, or 8.9 times the average full-day volume over the past 30 days.

Indonesia imposed a ban on unprocessed ore exports in 2014 to spur higher value smelting industries, but on Thursday the government unveiled sweeping new rules allowing the export of nickel ore and bauxite under certain conditions.

The news sent nickel prices tumbling more than five percent, although they later recovered slightly, as the resumption of nickel ore exports from Indonesia is projected to flood global markets and increase total supply.

Shares of Aneka Tambang, however, jumped as much as 5.8 percent, as analysts said an increase in its sale of nickel ores could make up for the drop in prices.

Vale exports only processed nickel from Indonesia.

"Nickel export is officially opened, we don't know the exact amount of nickel ore that Antam can export, but it is a definite positive to Antam," broker Trimegah Securities said in a report on Friday.

"It may ruin the global nickel supply and thus it is negative for Vale Indonesia."

The new rules require nickel miners to dedicate at least 30 percent of their smelter capacity to process low-grade ore, which is defined as nickel content of less than 1.7 percent.

"Previously the low-grade ores could not be used and were just thrown away. But with the new rules, we can use them now," Fajar Harry Sampurno, the deputy state enterprises minister, told Reuters.

Antam Chief Executive Tedy Badrujaman welcomed Indonesia's policy shift, saying the move would revive the mining industry and boost regional economies.

When asked when Antam will start shipping out nickel ores, the company's corporate secretary, Trenggono Sutioso, said: "We are still calculating and planning for the opportunity to sell low-grade nickel, both domestically and overseas."

Additional reporting by Wilda Asmarini and Eveline Danubrata