Metal concentrates resume export out of Indonesia

Indonesia has allowed two companies to export some metal ore concentrates after they agreed to pay a new 20 per cent tax.

In the first shipments of their kind since January, an Indonesian official said two firms had agreed to pay the 20 per cent export tax and were allowed to export the iron ore, lead and zinc concentrates.

The move comes after the government banned the export of unprocessed ore and placed a tax on the export of metal concentrates in January.

The policy was aimed at forcing mineral companies to build smelters and processing facilities but it worked to halt the shipment of concentrate valued at around $500 million a month as mining firms grappled with the new rules.

Copper concentrate shipments remain stranded as some companies argue the new tax contravenes export contracts.

Coal and minerals director general Sukhyar told Reuters two companies had “finally” agreed to start paying the new tax.

"There are two firms that have started to export; Sebuku Iron Lateritic Ores (SILO), and Lumbung Mineral Sentosa," Sukhyar said.

SILO shipped two loads amounting to around 10,000 tonnes of iron ore concentrate, while Lumbung had exported 8000 tonnes of lead and zinc concentrate.

Sukhyar said both companies were shipping ore to China.

SILO is expected to export 8 million tonnes of iron ore concentrate a year, while Lumbung should ship 29,000 tonnes a year. 

The tax has forced Newmont to declare force majeure on copper sales from Indonesia and put 80 per cent of its Batu Hijau mine employees on leave at reduced pay.

The move allows the company to miss deliveries because of issues out of its control.

Newmont said the export tax, which is set to increase from 25 per cent this year to 60 per cent in 2016, conflicts with previous agreements it had in place with the Indonesian government.

Freeport-McMoran recently signed an MoU with the Indonesian government which will see it resume export copper exports.

Before the export changes, Indonesia was the world’s largest supplier of nickel ore and supplied a majority of iron ore and bauxite.

Sukhyar said the policy was working, with progress being made by companies to meet domestic processing requirements.

The bans and export stoppages 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.