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Indonesian Ni Ore export tax levied 20pct

Steel News - Published on Sun, 13 May 2012

The Indonesian government enforced an export tax system effective May 6th 2012 in which 20% export tax is levied on 14 mineral products of Indonesian origin including nickel ore. As a result Japan and China, two major importers of the nickel ore from Indonesia will be negatively affected as their costs to produce nickel bearing products will inevitably increase.

Furthermore, the export tax of 20% enforced this time is said only the first step towards the full ban of the exports of minerals from Indonesia scheduled in 2014. The government, on alert for export rushes before the entire ban of exports, will most probably increase the tax to 50% as the second step, followed by a total export ban of the minerals as the third and final step.

The government enacted in 2009 a law to ban exports of minerals from Indonesia for enforcement in 2014, followed by a ministerial decree from the Ministry of Energy and Mineral Resources on February 6, 2012 that stipulated an advanced enforcement of the law in May 2012. With the decree, it was understood by the relevant industries that exports of the 14 minerals would be banned in May but the government apparently made a kind of compromise by imposing an export tax of 20% to start with in order to cope with the objections from Indonesian mining industry and with the various opinions within the government about when and how to enforce the law.

An analyst said that the production cost of nickel pig iron in China will increase by USD 50 to USD 70 per lb if 20% of export tax is imposed. For reference, it is said that the total production cost of NPI has been USD 8 to USD 9 per lb and the LME nickel price on May 4th 2012 was USD 7.92 per lb. One thing to note is that the NPI\'s production cost can be reduced by 20% to 30% by introducing a new smelting/refining method adopting rotary kilns and electric furnaces which is expected to fully absorb the cost increase in the ore. On the other hand in Japan there seems basically no room to absorb the cots increase in ferronickel production, as cost trimming has gone already to the extreme. Therefore it is really challenging for ferronickel producers how to effectively minimize the impact.

From the nickel ores imported from Indonesia, the Philippines and New Caledonia, Japan produced 56,300 tonnes of ferronickel and China produced 250,000 tonnes to 300,000 tonnes of NPI in 2011. Japan imported 1.9 million tonnes of the ore from Indonesia in 2011 while China imported 25.71 million tonnes of the ore from Indonesia in 2011. However China\'s reliance on the Indonesian ore can be said much bigger if the nickel ores imported from the Philippines, about 10 million tonnes in 2011 are excluded from China\'s imports of nickel ores, because the Philippine ores may have to be categorized in a sense as iron ores of low iron content.

Source - TEX Report


Posted By : admin on Sun, 13 May 2012
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