The latest reports suggest that Indonesia has suspended nickel ore exports immediately rather than stopping overseas shipments early next year as the world’s top producer of the mineral looks to ramp up processing at home to boost its income.
The surprise announcement comes about a month after resource-rich Indonesia shocked markets by saying it would roll out a planned nickel-ore export ban two years early.
The country had implemented an export ban on nickel ore in 2014 only to reverse course and relax it in 2017, when the government said companies would have five years to prepare and start building homegrown smelters – which extract base metals from ore. However, later on the Indonesian government revised its ban timeline to early next year rather than in 2022. But now this ban again has been preponed to the ongoing year of 2019. The government said that the decision of early ban is aimed at speeding up smelter construction in the country, which has almost a quarter of all nickel reserves, valued at around USD 350 billion.
As per the government officials, the country wants to churn out higher-value mining products, rather than just shipping raw ore abroad – including to top importer China, which uses nickel to make stainless steel.
This decision of early ban has impacted the market sentiments of stainless steel (where nickel is key raw material) industry in China that took almost all of its nickel ore requirement from Indonesia. Market participants said that China is a country with a shortage of nickel ore resources. Driven by nickel smelting profits since last year, the domestic production capacity of ferronickel has expanded rapidly. Once Indonesia starts banning the nickel ore export, the impact on the raw material supply of it will be tremendous.
It is being estimated that by 2020, the nickel supply gap in China will be around 8 MnT. The export ban of nickel ore will lead to the changes in the supply chain of iron ore in both China and Indonesia, which would subsequently result in China having nickel-iron production capacity but no nickel ore.
This move is also important as the government plans to turn the country into an electric-vehicle hub. Nickel is used in lithium batteries that power gas-free cars.
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