Interfax reported that Indonesia may ban the export of copper nickel ore as early as May 2012 instead of in 2014, but Norilsk Nickel is not taking this as a negative.
Company sources told Interfax that the Russian mining giant, which is eyeing the acquisition of copper deposits in Indonesia, does not consider news of possible changes to the country's laws as negative.
A company representative said that "Restricting the export of ore has been proposed earlier. The change in timeframe in no way tells on our plans."
Norilsk Nickel is still studying the Indonesian market and evaluating the prospects for its own prospects there, and a final decision has not been made. The company had not been planning to take ore out of Indonesia; it wanted to process it at a copper smelting plant it was going to build within the country jointly with local company Nusantara Smelting.
Nusantara announced back in August 2008 its plans to build in Bontang a copper-smelting plant with annual production capacity of 200,000 tonnes of copper. Investment in that project is estimated at USD 850 million. Plans are that raw material will be supplied by local subdivisions of Freeport McMoRan Copper & Gold, Inc and Newmont Mining Corp. Nusantara wants to import some of the copper concentrate. Plant construction was slated to start in 2009 and plant launch in H2 2012. This plant would be looking to be the country's second largest after Gresik in Eastern Java.
Mr Jero Wacik minister for energy and mineral resources of Indonesia signed a regulation that aims to boost domestic metal production by banning exports of ores including bauxite, nickel, gold, copper and iron starting 2014.
The ban on nickel ore may be activated earlier and could have major implications for China, which received 25.60 million tonnes of nickel ore shipments from the Southeast Asian country in 2011, about 53% of its total imports of the material. The Philippines supplied roughly 22 million tonnes of nickel ore to China in 2011.
A Shanghai based source with an Indonesian miner told Interfax on the condition of anonymity that "Indonesian ore export regulation is a hot topic among nickel traders and miners at the moment, but our transactions have not been disrupted by the news. The ban is likely to be unworkable as Indonesia's poor infrastructure, especially its underdeveloped power grid, will make smelters reluctant to localize operations."
Though Indonesia possesses ample coal and nickel resources, the distance between the resources is substantial, creating a quandary in terms of power sourcing for smelters. The nickel ore deposits are concentrated in West Sulawesi in the center of the country, while coal resources are concentrated in Sumatra in the west.
The source said that "Despite recent investment in power infrastructure, it will be difficult to transfer coal resources to the smelting areas before the ban starts."
The price of nickel may nonetheless be driven up in the short-term by market expectations of supply shortages as a result of the ban. In the long term, oversupply problems look set to continue. In September 2011, the International Nickel Study Group predicted a 70,000 tonnes surplus in the global nickel market this year, up from a 17,000 tonnes surplus last year. Nickel prices on the London Metals Exchange have risen 15% since December 2011 on the back of positive economic data from the US and stock replenishing in China prior to the Lunar New Year holiday, though gains were curbed by weak demand.
Myyouse nickel analyst Mr Xie Huiyu told Interfax that "Though nickel rose in December, the price of stainless steel stayed steady indicating that downstream demand remains soft."
(Sourced from www.interfax.ru)
