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Jakarta Post

Coordinating minister Luhut backs temporary ban on nickel ore exports

  • Norman Harsono

    The Jakarta Post

Jakarta   /   Wed, October 30, 2019   /   11:25 am
Coordinating minister Luhut backs temporary ban on nickel ore exports Workers monitor activities at a nickel mine. The government has decided to temporarily stop exports of nickel ore after the export quota was exceeded. (KONTAN/Cheppy A Muchlis)

Coordinating Maritime and Investment Minister Luhut Panjaitan has backed the decision to temporarily stop nickel ore exports amid violations of export quota.

He said the temporary export ban, which will last between one and two weeks, was necessary to give the Customs and Excise Office, Corruption Eradication Commission (KPK), Indonesian Maritime Security Agency (Baklama) and Navy time to investigate the violation.

“We will temporarily stop exports until customs, the KPK, Baklama and the Navy complete a coordinated inspection,” he told reporters in Jakarta on Tuesday evening.

The government, he continued, imposed the temporary ban because exports exceeded threefold the government’s nickel export quota.

The decision was made just two months before the government will impose a permanent ban on mineral ore exports in January, next year.

According to Energy and Mineral Resources Ministry data released last month, Indonesia’s nickel export quota between 2017 and the first half of 2019 was 76.2 million tons, while exports totaled only 38.2 million tons during the same period.

“Right now, on average, there are between 100 and 130 shipments of nickel ore each month. Normally there are only 30 shipments,” added Luhut.

On Monday evening, the day before the coordinating minister’s announcement, Investment Coordinating Board (BKPM) head Bahlil Lahadalia declared that nickel players had agreed to stop nickel ore exports, effective immediately.

“This agreement is not based on a letter from a ministry but on a common understanding between the nickel association and the government. We love our country and want to protect its sovereignty,” he said.

While the BKPM’s declaration was supported by the Indonesian Smelter Association (AP3I), it was not fully supported by the Indonesian Nickel Mining Association (APNI), which disagrees with the former organization over the benchmark price for domestically sold nickel ore.

The BKPM’s declaration is not backed by a legally binding document and has been called invalid by energy experts. The legal basis for Luhut’s temporary ban remains unknown.

Nevertheless, news of the BKPM’s announcement saw nickel prices rise 1.2 percent to US$16,980 a ton on the London Metal Exchange on Monday, reported Bloomberg.

Nickel prices peaked at $18,060 a ton in early September, a month after the issuance of Energy and Mineral Resources Ministerial Regulation No. 11/2019 on coal and mineral businesses, which brought forward the permanent export ban to January next year.

Luhut emphasized that the temporary ban was not intended to start the permanent ban earlier than the initial plan, but was aimed at disciplining the country’s mineral ore exporters.

Ministry spokesman Agung Pribadi said the Minerals Directorate General, a division of the ministry that oversees the mining industry, was “conducting a field evaluation of under construction smelters to decide future policies related to nickel exports”.