Just days before Indonesia is set to implement a ban on the export of raw bauxite ore, miners are again begging the government to reconsider the policy because domestic facilities are not enough to process all their bauxite.
Indonesia, the world's sixth-largest producer of bauxite, will stop exporting aluminium feedstock from Saturday under a 2020 law that bans all exports of raw ore and aims to boost investment in smelters.
The Indonesian government last month gave miners of other minerals, such as copper and iron, a one-year extension to allow more time to complete smelters, but retained a ban on bauxite exports.
Indonesia has three smelter-grade alumina plants and one chemical-grade alumina plant with a combined input capacity of nearly 14 million tons, according to official data. Indonesia's mining minister Arifin Tasrif said last month that would be enough to absorb bauxite production.
However, Ronald Sulistyanto, president of Indonesia's Association of Bauxite and Iron ore Companies, told Reuters on Monday that bauxite production had reached about 30 million tonnes a year and could force miners to halt production if there was no market for excess iron ore.
Indonesia's ban on bauxite exports aims to replicate the success of the nickel processing industry in attracting foreign investors. Indonesia banned the export of raw ore overseas in 2020.
However, Sulistyanto, who represents a group of 28 miners, said bauxite processing equipment starts at about $1.2 billion and could cost three times as much as a nickel pig iron smelter. Since Indonesia first announced plans to ban raw ore exports in 2009, miners have struggled to access bank financing.
"Our members want the government to reassess if it wants the mining industry to move forward," Mr Sulistyanto said. Indonesia's Ministry of Energy and Mineral Resources did not respond to the group's request.
"Miners want to build alumina smelters, but they need support, not punishment," Mr Sulistyanto added. It also called on authorities to guarantee bank loans to alumina smelters.
However, Irwandy Arif, a special staffer for the mining minister, told Reuters that mining companies had had enough time to respond to the ban and that it would be implemented as planned.
Irwandy Arif told Reuters that the government might consider exempting some miners from the ban if their smelters were half built, but that seven of the eight alumina projects under way had not made substantial progress.
Irwandy Arif said the Indonesian government had tried to facilitate meetings between mining companies and banks, but could not provide guarantees. "One of the criteria is progress in smelter construction, and there has been very little progress in alumina smelters, which makes it difficult for the government to consider exemptions," he said.
Fitch Solutions said the ban was unlikely to have a significant impact on the global market because China, the world's largest aluminium producer, could source bauxite from countries such as Guinea and Australia, both of which could ramp up production.
Industry experts say that unlike nickel, Indonesia's ban on bauxite is unlikely to attract foreign investment due to the existence of alternative bauxite producers.
