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BMI View: Indonesia's mineral production growth will remain slow on the back of heightened
environmental protection, slowdown in the Chinese economy and continued mineral price weakness. The
impending ban moderation on the export of mineral ores will provide some respite to production, especially
in the case of bauxite, although uncertainty on the issue will rumble on.
Latest Developments & Structural Trends
Under current regulations, as of September 2016:
- Minerals like copper, iron ore, lead and zinc are still allowed to be exported temporarily up to January
2017, to allow companies time to develop their smelters.
- Bauxite and nickel ores, however, were not given this temporary allowance, and exports have been
banned since January 2014.
Impact on exports in 2017 under current regulations:
- Iron ore, copper ore, zinc and lead ore exports will be close to nil, as major smelter construction will not
be completed by 2017, which means Indonesia will lose a large positive contributor to its GDP. As an
example, major copper producers Freeport McMoran and Newmont Nusa Tenggara have yet to complete
15% of the construction of their respective smelters.
- Nickel pig iron (NPI) smelters will come online and NPI exports will surge, along with nickel ore