The Indonesian Government Announces a Bauxite Ore Export Ban; To Be Imposed in June 2023
On 21 December 2022 Indonesian President Joko Widodo stated that the Indonesian government will ban exports of bauxite ore starting from June 2023 in an effort to encourage the development of a domestic bauxite processing and refining industry.
This announcement was not a big surprise considering Indonesia has been eager to curb exports of mineral ores over the past decade as it seeks to develop a domestic mineral refining and processing industry (based on Law No. 4/2009 on Mineral and Coal Mining).
Subscribers may even remember that we quoted President Widodo in our June 2022 report:
“After the nickel ore ban [imposed in January 2020], we focus on bauxite in 2022. And after bauxite, we will go for tin and copper. We have to dare to take these steps!”
So, the decision to ban bauxite ore exports certainly does not come out of the blue, although perhaps some expected Indonesia to become a bit more careful after the World Trade Organization (or WTO) ruled in November 2022 that Indonesia's nickel ore export ban (which was imposed at the beginning of 2020) violates WTO rules (a ruling Indonesia appealed against). And so, some international resistance doesn’t seem to influence Indonesia’s ambitions in this case.
In fact, President Widodo said the success of the nickel ore export ban is partly what inspires the government to follow suit with a bauxite ore export ban.
The nickel ore export ban managed to attract foreign investment in the construction of smelting facilities, especially from China. Meanwhile, according to information on the website of Indonesia’s Cabinet Secretariat, the nickel ore export ban successfully increased the value of the country’s nickel exports from IDR 17 trillion (approx. USD $1.1 billion) at the end of 2014 to IDR 326 trillion (approx. USD $21 billion) in 2021, meaning an increase of 19 times. In 2022 the value of nickel exports is even targeted to reach beyond USD $30 billion.
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