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Smelters buying nickel ore below floor price will get sanction: ESDM Ministry
The floor price will be monitored and smelting companies that do not obey it will receive a sanction from the ministry.
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Investment Coordinating Board (BKPM) chairman Bahlil Lahadalia, together with representatives from the Indonesian Nickel Mining Association (APNI) and the Processing and Smelting Companies Association (AP3I), chats after a meeting on nickel ore exports in Jakarta in September 2019. (The Jakarta Post/Adrian Wail Akhlas)
T
he Energy and Mineral Resources (ESDM) Ministry will issue a new regulation later in March to set up a floor price for nickel ore to ensure fair business practices in the domestic nickel market following the introduction of the nickel ore export ban in January of this year.
The ministry’s mineral business development director Yunus Saefulhak said that all smelting companies should adhere to the floor price, which is to be set and regularly adjusted by the government based on prices on the international market and the operating costs of local miners.
He said the floor price would be monitored closely and smelting companies that did not obey it would receive a sanction from the ministry.
The government, through Energy and Mineral Resources Ministerial Regulation No. 11/2019, pushed the nickel ore export ban forward to January 2020, two years earlier than the date set by Ministerial Regulation No. 5/2017, which allowed nickel mining companies to export nickel ore with less than 1.7 percent purity until the end of December 2021.
Before the export ban took effect, the government had urged mining companies to build smelters to process their ore before shipping it overseas. Now, mining companies that do not have a smelter have to sell their ores on the domestic market to those who already have smelters. Small miners say they often have to sell their ore at unfairly low prices because of the captive market.
“The regulation of the floor price is urgently needed to ensure fair prices both for ore miners and smelting companies ,” Yunus said during a public discussion held by the Association of Young Indonesian Businessman (Hipmi) on Friday.
The chairman of Hipmi, Mardani H. Maming said during the meeting that the government should consider the operating costs of the nickel mining companies in the establishment of a floor price so that the mining companies who did not have their own smelters would be able to survive.
