Vale Indonesia's board of directors during a press conference at the Indonesia Stock Exchange in Jakarta on Tuesday. (JG Photo/Nur Yasmin)

Nickel Ore Export Ban Is Good for Indonesia: Vale


AUGUST 27, 2019

Jakarta. Vale Indonesia, the country's largest nickel producer, said the government's planned ore export ban will give the country a strategic advantage and bring positive impact to the local nickel industry and the Indonesian economy in the long term.

The government now wants the ban to start taking effect in October, three years earlier than the initial plan's 2022 target. 

The Indonesian Nickel Mining Association has voiced their objection to the plan, saying that it would disrupt their members' contractual obligations and business plans.

Bernandus Irmanto, the president director of Vale Indonesia, however, said Indonesia may be better off by imposing the ban sooner than later, especially considering its ambition to make electric car batteries from nickel ores. 

"The best limonite ores for electric car batteries are grade 1.4 and below. If the government allows exports for grade 1.7 and below, then we are exporting the best materials for the batteries. Most countries are buying the main materials for batteries from us, and the receiving countries, such as China, mostly just pile them up," Irmanto said on Tuesday. 

In addition, the ore export ban would keep the price of nickel in the global market high. Nickel price has been rising by 30 percent since June.

"Indonesia is a big player in the global nickel market. We contribute 27 percent of all the nickel products in the market. We stand to profit a lot from a higher price for nickel," Irmanto said. 

According to a 2018 WoodMac study, Indonesia's 27 percent share of the global nickel market was followed by the Phillippines' 14 percent, Latin America's 10 percent and New Caledonia's 9 percent.

However, Irmanto said the government must take caution when issuing the ban since some local nickel companies already have legally binding export contracts.

"The government must look into this carefully and be cautious when setting the quota for the export ban. Some companies can be impacted in the long term if they are already bound by a legal contract to export nickel ores," Irmanto said.