Indonesian Government Confirms Plans To Ban Bauxite Exports In June

Indonesian Government Confirms Plans To Ban Bauxite Exports In June

The Indonesian government confirmed this week that it intends to go forward with a planned ban on the export of bauxite ore in June of next month in a bid to boost domestic processing of the aluminium predecessor.

Indonesian’s government has a history of similar bans on commodity exports, having barred the shipment of palm oil and coal earlier this year.

According to Indonesian president Joko “Jokowi” Widodo, the move is an effort at reproducing the success the country had in building a local nickel processing sector.

“The government will remain consistent in implementing downstreaming so the value add can be enjoyed domestically for the country’s development and people’s welfare.”

Although the People’s Republic of China was at one time Indonesia’s biggest buyer of bauxite ore, a ban on bauxite exports from 2014 to 2017 led to China’s development of different bauxite sources.

Per former head of the aluminium department at the China Nonferrous Metals Industry Association Wen Xianjun, the previous ban led the Middle Kingdom to develop sources in Africa.

“Compared with then, China’s imports of bauxite are more diversified now.”

According to customs data, Indonesian bauxite accounted for about 15 percent of China’s entire bauxite imports. Last year China imported 17.8 million metric tons of bauxite ore, and through eleven months this year the country has taken in 17.98 million metric tons.

Bauxite traders do not foresee a tremendous effect on the overall bauxite ore market as the Indonesian export ban goes into effect. According to an unidentified bauxite trader who talked to Reuters this week, few industry insiders are concerned.

“It won’t cause any major supply headwind as Indonesia now only accounts for a relatively small share of China’s supply, Guinea and Australia will immediately make up the lost volume (after the ban).”

The government says the country has an alumina refining capacity of 4.3 million metric tons per year with another 5 million metric tons per annum currently under construction.