Indonesia to ban exports of bauxite, tin, cobalt – resources minister

➤ Indonesia plans to ban exports of unprocessed bauxite, cobalt and tin starting in June, following a nickel ore export ban in 2020.

➤ Indonesia welcomes investment from Group of Seven countries as well as China.

➤ The country's electric vehicle target aims to decrease the $50 million per day the country spends on fuel for motorcycles alone.

Indonesia will follow through on plans to ban exports of bauxite, cobalt and tin in June as part of the country's strategy to draw more economic benefits from its rich natural resources, according to Arifin Tasrif, the country's minister of energy and mineral resources. Indonesia's nickel ore bans in 2014 and 2020 have attracted foreign manufacturers of stainless steel, batteries and cars to build a supply chain from nickel mining and smelting to making batteries and EVs.

At the recent G-7 Ministers' Meeting on Climate, Energy and Environment in Sapporo, Japan, Indonesia's increasing role in the energy transition was apparent. The G-7 nations, a group of advanced economies, agreed to boost cooperation on critical minerals supply chains and uphold strong environmental, social and governance standards for the nickel, lithium, copper and other metals needed for electrification and battery technologies. Indonesia was invited to the ministerial meeting as chair of the Association of Southeast Asian Nations (ASEAN), a 10-country economic partnership.

S&P Global Commodity Insights spoke with Tasrif on the sidelines of the G-7 meeting, where the minister explained Indonesia's resource nationalism strategy to attract investment and build up manufacturing and refining capacities instead of shipping the unfinished metals overseas. The following conversation has been edited for clarity and length.

S&P Global Commodity Insights: What do you hope will be achieved by banning exports of bauxite, copper and tin starting in June?

Minister Arifin Tasrif: What we are not allowing is exporting raw materials because these minerals are not renewable. We have 270 million people, and it's growing by the year. How can we fulfill their needs? We have to create jobs. To create jobs, we have to develop projects and economic activities. While we are not allowing to export the raw material, we welcome partners to work together with us, create value together and then also share the benefit.

On copper and bauxite, the mandatory obligation is to build the smelters. Besides having a positive impact on the economy, minerals downstreaming can also help to ensure environmental protection by restricting illegal mining activities.

Has the ban on nickel ore exports been a success?

Yes, there are a number of nickel facilities being built, not only in the Morowali area, but now in Sulawesi. They're [working at] speed to build the processing facilities. They're working with a number of companies from many countries in the world including G-7 members.

With the G-7 looking to boost diversification of critical mineral supplies, would you welcome additional investment from these countries?

There are a number of G-7 countries already in Indonesia, such as French company Eramet SA working together with a German company. Just months ago, Ford Motor Co. came to Indonesia to build smelting facilities. We are open to others. At least we are not sided on one side. We are a friend of everybody.

Will close cooperation with China be a hurdle for G-7 investment, since all major industry parks in Indonesia were jointly built or operated by Chinese companies?

In Indonesia, actually we are on the neutral side. What we expect is cooperation with all countries. We are more interested in how we can work together to develop the prosperity of people [both in Indonesia and in the investor country] rather than just thinking about the tensions.

What progress have you made on a proposed limited trade agreement with the US?

Indonesia does not have a free trade agreement with the US, but we proposed a limited [free trade agreement] for some minerals shipped to the US. This proposal is still at an early stage.

It is the intention that companies in the electric vehicle battery supply chain operating in the country can benefit from US tax credits. We expect the limited [free trade agreement] will be implemented with a requirement for processing, such as for nickel, aluminum, cobalt and copper.

Processing nickel through high-pressure acid leaching, especially in Indonesia's wet environment, comes with significant environmental risks. How are you ensuring nickel processing waste doesn't contaminate the local water supply?

There is a regulation issued by our environmental ministry for how to treat the effluent from the processing facilities. The regulation is quite tight to avoid contamination. We measure daily; we monitor the water quality. We don't allow anymore to dump tailings into seawater.

Before we entered [high-pressure acid leaching], we used to separate the high-concentration nickel to be processed. Now with technology development, the rest of the waste that was dumped as tailings instead is being processed.

We realize the effect of pollution. We don't want it, it will directly affect our people. So we have to make a strict regulation — tight control — and then apply such kind of close scrutiny to the people who are not obeying the regulation.

Is Indonesia's goal to reach 2.5 million EVs by 2025 realistic?

The number of EVs isn't the main target. The main target is how quickly we can reduce emissions, reduce consumption of fossil fuel and save our deficit.

We subsidize fuel heavily — you see how high the oil price is. Counting only motorcycles, we have 125 million units right now that consume 600,000 b/d of oil. So we burn more than $50 million per day on fuel. If we can accelerate the conversion of those vehicles, we can lower fuel imports, demand and subsidies while reducing emissions. At the same time, we improve the income of the people. We can create a small industry to facilitate the EV conversion; they also enjoy saving on energy costs. It's very significant.

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