Indonesia sees China as ally as it weighs bans on exporting minerals

13th September 2019 By: Bloomberg

JAKARTA – Indonesia, which is weighing an early ban on exports of bauxite and copper concentrates, is betting on Chinese companies to add to the billions of dollars of investment in building smelters and processing plants.

Making a deal with China is “simple", as the country “is willing to meet any request from us,” said Coordinating Minister of Maritime Affairs Luhut Binsar Pandjaitan, who also oversees mining. “The most important thing is how Indonesia can protect its national interest, not the origin of investment,” he said.

Indonesia expects the export ban to lure about $20-billlion in fresh investment into nickel and related projects by 2024. Several overseas firms are planning battery-grade nickel facilities in Indonesia, including China’s Tsingshan Holding Group Co. and PT Vale Indonesia, a unit of the Brazilian mining giant. Investments have totaled about $9-billion so far, Pandjaitan said.

Indonesia last month jolted the metals market by expediting a ban on nickel ore exports by two years to force miners to build smelters to locally process the ore used in stainless steel and lithium-ion battery. It’s now studying bringing forward export curbs on bauxite, asphalt and copper concentrates in line with President Joko Widodo’s efforts to transform the country into a processor of major minerals.

“We just realized that asphalt can be used as propellant for a rocket. Hence, why should we export the raw materials? Why don’t we have the downstream industry here?” Pandjaitan told a forum in Jakarta on Thursday. “The question is where does the technology come from? Well, again, the one that can make it easy is China.”

Chinese investment in Indonesia soared significantly in Widodo’s first term, resulting in occasional anti-Chinese sentiments in Southeast Asia’s largest economy. But Pandjaitan doesn’t mind the source of the investment as long as companies “bring the environmentally-friendly, first-class technology, and help educate the locals.”

“Some people say, Luhut is a Chinese agent. Others say that I am the honorary ambassador of China. It’s just a prattle,” he said.