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Ban on unrefined nickel exports positive in long run: Economist
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Heavy equipment is in use at a nickel mining site. (Kontan/Cheppy A. Muchlis)
T
he government’s controversial move to bring forward a ban on the export of unprocessed nickel is a long-term play that will only work if accompanied by the development of the downstream nickel industry and regulatory certainty, an economist has said.
Enrico Tanuwidjaja, economist at Singapore-based United Overseas Bank (UOB), said a turnaround was possible, because domestic and global demand for refined nickel would rise over the years amid increased demand for electric vehicles and higher nickel content in batteries.
“This [turnaround] would bring about more stability in the rupiah and opens up room for a lower interest rate environment in the country,” writes Enrico in a macroeconomic note released on Oct. 21.
In the short term, the ban would cut exports by US$65 million each month, but Enrico maintained that such a cut was “relatively small” and “relatively manageable” considering the trade deficit this year averaged $230 million a month.
The government had initially planned to ban raw nickel exports in 2014 but postponed the deadline to 2022 following protest from mining companies. The government then surprised stakeholders when it decided in September to bring the ban forward to 2020.
The Indonesian Nickel Miners Association (APNI), whose members are mostly small nickel producers, opposed the accelerated export ban, saying small producers had not had enough time to accumulate capital to build smelters.
