New Indonesian mining laws to impact Australian nickel companies

Australian miners are likely to be affected by changes made to Indonesia’s mining policy for exports of minerals including nickel and bauxite.

The new Indonesian mining rules, announced last week, will relax a three-year ban on exports of nickel ore and bauxite, while also extend exports for mineral concentrates.

Indonesia plans to allow exports of excess nickel ore and bauxite by mining companies that are building processing plants in the country, according to a Bloomberg report.

The move eases an existing ban on unprocessed ore shipments, which Indonesia implemented in 2014 as a way of pushing mining companies to construct smelters in the country for local processing.

Companies will be able to export ore provided they show progress towards building smelters in a five-year period. They will eventually have to set aside at least 30 per cent of their smelter capacity to process low-grade ore, which is defined as material with less than 1.7 per cent of nickel content and below 42 per cent aluminium.

Indonesia’s move is expected to unlock significant supply and impact Australian nickel producers, such as Independence Group and Western Areas, which both own assets in the Goldfield region of Western Australia and saw their ASX share prices decline substantially following the news.

According to Citi analyst David Wilson, the law change could mean the equivalent of up to 250,000 tonnes of contained nickel is “now potential available to the market”.