In a move to enrich local processing, the Indonesian government may impose an export tax on products containing less than 70% nickel, Reuters reports, citing comments from the country's Investment Minister, Bahlil Lahadalia.
"'If producers want to export the products with less than 70% nickel content, it is possible that we apply an export tax,' the minister said, adding that discussions were at an early stage and no details had been decided yet," the news agency reported on September 17. "Most nickel products exported from Indonesia have nickel content of 30% to 40% and could be refined further domestically to at least 70%, Bahlil told a virtual media briefing."
Colin Hamilton, a mining analyst at BMO Capital Markets, points out that it wouldn't be the first time Indonesia has imposed restrictions on nickel exports, and noted that the minister's comments underscore the country's desire to develop a domestic electric vehicle industry.
"Having been the world's largest ore exporter, Indonesia banned nickel exports in 2014, reversed that ban in 2017, and brought forward the planned reinstatement of the ban from 2022 to 2020," he commented in a research note. "However, the volatile policy has seen significant Chinese investment in downstream processing operations in Indonesia, and a rise in export revenues. Any refined nickel restriction would be a new development, and more impactful on global market dynamics."
Today Indonesia is the world's largest refined nickel producer, Hamilton says.
"Quite simply, the world needs Indonesia's nickel for stainless steel, and while a ban is impractical, further changes to downstream nickel processing seem inevitable," he wrote.
"With Indonesia representing almost 40% of mined nickel, and an even larger proportion of nickel into stainless, the world simply can't do without this material in the short term. Thus we would expect pushback on any ban. However, an increased export tax to hurt the economics of exporting would seem the path of least resistance, to promote more domestic stainless steel and cathode plants."