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Indonesia's bauxite export ban set to take effect Jan 13, 2014

Tuesday, Nov 26, 2013

Indonesia's plan to ban the export of mineral ores, including bauxite, is now slated to take effect January 13, 2014, an official from the Directorate of Export of Industrial and Mining Products told Platts Monday.

Numerous press reports have recently said the Southeast Asian country may relax or revise the planned ore export ban, but the official said the country aimed to stick by its Mineral and Coal Mining Law mandating that mining companies process raw minerals before exporting them.

"In other words, raw mineral exports will be banned as of 13th of January 2014," he said.

Recent market talk also speculated that Indonesia may revise the current export tax of 20% for mineral ores in 2014 despite talks of the ban.

"The Ministry of Finance is the authorized agency to determine export duty and we have not received any information if there is further regulation regarding this provision," the official added.

Meanwhile, China, the major importer of Indonesian bauxite, remained generally skeptical that a full ban would actually be imposed due to economic and social factors.

Bauxite and other ore exports bring in a lot of money to Indonesia, and a full ban could hurt the economy significantly, many Chinese market participants said.

Bauxite supply in 2014, however, remains a major concern to Chinese importers, many of which have been actively seeking and stepping up their search for alternative supplies, as well as stockpiling, in recent months.

"We doubt they will ban, but you never know, so it's best to be prepared," one Chinese refiner said.

In recent years, several Chinese companies have announced joint venture agreements with Indonesian partners to invest in bauxite and alumina projects in the Southeast Asian country, in a bid to secure long term bauxite supplies.

Aluminum Corporation of China (Chalco) and Indonesian miner Indonusa Dwitama inked a joint venture to build a 2 million mt/year bauxite mine and a 1 million mt/year alumina refinery.

Shandong-based aluminum alloys producer Hongqiao Group also announced at the end of 2012 plans to invest an estimated $1 billion in Indonesia to build a 2 million mt/year refinery with local partners Winning Investment, Cita and Danpac.

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