Indonesian nickel export bans may aid Australia

Indonesia’s implementation of its long discussed ban on mineral exports to support domestic processing will see fortunes rise for nickel miners.

In 2012 the Indonesian Government introduced new laws to curb foreign ownership and ban the export of raw materials, worth around US$2 billion annually, by 2014 to stop foreign companies exploiting the resources and to bring processing in country.

It brought the export law into effect on Sunday, and heralds what could be the largest shake-up of the nickel industry in years, as Indonesia is the world’s largest producer, according to Reuters.

The nation was also planning to halt the export of unprocessed copper, iron ore, lead, and zinc, however it granted a reprieve for these metals for export as concentrate until 2017, although it did not do the same for bauxite.

“Minerals that have to be refined before export are bauxite, nickel, tin, chromium, gold and silver because they don't have intermediate products," Sukhyar, director general of coal and minerals at the ministry, told Reuters.

This may spell good news for Australia and the Philippines.

The Philippines is predicting an increase in sales of nickel as Chinese demand for nickel for the development of stainless steel continues, even though it has stockpiles large enough to take it through to the end of the first quarter, according to Bloomberg.

Australian nickel producers have been hit hard by the fluctuations in nickel prices since a massive spike in 2007.

However the market has predicted the sector will grow again, with the Indonesian ban only likely to strengthen this belief.

Western Areas CFO Joe Belladonna explained that this is mostly likely due to the forecast squeeze on global nickel supplies, particularly as the higher grade, easier to process nickel sulphide supply swindles.

"Nickel laterites and nickel pig iron are not capable of filling this sulphide void at a time [when]the metal is increasingly being recognised and sought for its strategic application in stainless steel and other products with extraordinary performance characteristics," Belladonna said.

Due to this "industry performance is expected to improve during the five years through to 2017-18, with revenue rising at an annualised rate of 5.2 per cent to total $3.13 billion in 2017-18," IBISWorld stated.

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