Should Indonesia's Export Ban be Relaxed, Alumina Cost Would be Cut

Recently, Indonesia's energy minister has expressed that the Indonesian Mining Act will be revised this year. Once the law gets passed, the Indonesia may relax the rules on the export ban including nickel ore, bauxite ore and other raw ores.

Indonesia’s export ban about raw ore has carried out for two years, but the bauxite supply market has  not been affected by the ban. Instead, Indonesia - China's first big bauxite imports country, has been replaced by Malaysia. And in 2015, Indonesia's exports also decrease with the decrease of mining export. In addition, facing the survival predicament brought by the falling ore prices, Indonesia starts to rethink whether the deadline that asks miners to make factories within three years is "desperate".

The Indonesian ban has caused the reflection of the Indonesian government under multiple resistance again. Indonesia's minister of energy and mineral resources, Sudirman said: " If the revision about Mining Act should be passed, the ore export ban would be relaxed. The review of Mining Law will need the government and parliament for approval."

According to data released by Customs, China’s bauxite imports are 55.82 million tons in 2015, with 53.86% growth than last year, including 23.99 million tons of imports from Malaysia. It is obvious that Chinese importers have turned to countries such as Malaysia, Philippines, Australia, India, etc. since Indonesia carried out the ore export ban. Indonesia ban does not cause the shortages of bauxite supply, and Malaysia becomes the biggest beneficiary.

If Indonesia’s export ban should be relaxed, domestic alumina costs would be cut. The alumina production in our country are most dependent on imports of bauxite, and at present, the bauxite imports account for about 40% in China. SMM thinks that if Indonesia’s export ban should be relaxed, it would reduce the production cost of alumina as Indonesia’s landed price for bauxite ore is lower than other countries. As a result, the alumina enterprises using imported ore may be eased, but it can't help it completely out of the woods. For now, it will not affect the electrolytic aluminum enterprises, so there is still a long period of time even the act is carried out.