JAKARTA – Indonesia will probably drop a controversial plan to allow exports of low-grade nickel ore and bauxite amid opposition from local smelters and fears that it could upset Chinese investors who’ve poured billions of dollars into the country to build processing plants.

“Most likely there won’t be any relaxation for exports of nickel ore and bauxite,”  Luhut Panjaitan, acting energy and mineral resources minister, told reporters on Wednesday. The country “has attracted investments of about $5 billion, including for stainless steel, so why do we need to export if we can process domestically?”

The apparent U-turn comes about a week after Panjaitan had raised the possibility of easing the ban. The government had discussed allowing ore exports with 1.8% nickel content or less because the material is hard to process locally and the money would help fund local smelters. Shipments of 15-million metric tons a year were being considered.

A final decision has yet to be made and the government aims to complete discussion on the mineral export policy next week, Panjaitan said in Jakarta. The proposal has met resistance from top domestic nickel producers Tsingshan Bintangdelapan Group, partly owned by China’s Tsingshan Holding Group, and  PT Vale Indonesia, a unit of Brazil’s Vale SA. State-owned PT Aneka Tambang supported the move.

COPPER SHIPMENTS
The government is still reviewing its policy on copper concentrates exports, Panjaitan said. The current legislation stipulates that shipments must end from January 2017 as part of a drive to get more value from sales by encouraging miners to invest in domestic processing capacity.

Southeast Asia’s biggest economy banned raw ore exports in 2014 to stop mineral wealth disappearing overseas. The country was the top supplier of nickel ore to China for use in stainless steel before the moratorium.

The Philippines ramped up production to fill the gap, but the country’s mining industry is now facing a raft of closures for environmental reasons. Indonesian sales of 15-million tons would have been almost half the 32.3-million tons shipped by the Philippines last year.