Indonesia is considering a plan to limit the construction of smelters that produce nickel pig iron or ferric nickel in an effort to optimize its limited reserves of nickel ore to produce higher-value products, a senior mineral ministry official said Thursday.
Indonesia is currently the largest producer of both metals, and restrictions on more refineries opening could hit Chinese stainless steel producers as China is one of Indonesia's biggest customers for relatively cheap materials.
Ridwan Djamaluddin, a senior official at the Ministry of Energy and Mineral Resources, said there was a need to limit new smelters because of limited reserves of nickel ore. The government discussed the plan with a parliamentary committee.
"Based on the input capacity of existing and ongoing pyrometallurgical smelters, nickel reserves will last less than 20 years, assuming no further exploration and no restrictions on construction," he said.
The government is keen to develop a complete nickel supply chain, including the production of nickel sulfate for electric car batteries, as well as the production of batteries and assembly of electric vehicles.
Ridwan added that the proposed restrictions on new smelters would not apply to those already under construction.
Indonesia banned exports of unprocessed ore last year in a bid to boost its nickel smelting industry.
He said that while many smelters were exporting nickel pig iron and ferric nickel, not many had moved up the value chain to process both into stainless steel.
Southeast Asia's largest economy has 16 nickel smelters in operation, producing nickel pig iron and ferric nickel. That number is expected to rise to 29 within five years, according to mining ministry data.
One lawmaker, a former member of a parliamentary committee, said smelters needed to be encouraged to move up the chain.
"What needs to be promoted is the export of stainless steel, or at least the export of nickel sulfate, so that we can achieve higher value added."
