What are the effects of the Nickel Ban?

Faced with industry unrest, a significant budget deficit, and having missed its 2016 revenue target by $17.6bn, the government banned the export of nickel ore and bauxite in 2014 in order to spur higher-value processing of mineral ores. A year before the ban kicked in, Indonesia exported around 60 million tonnes of nickel ore. The ban cost Southeast Asia’s biggest economy billions of dollars in lost revenue and led to job losses, as many mines laid off their workers. The controversial policy was intended both to boost smelting capacity by developing higher value domestic processing facilities and reduce Indonesia’s exposure to volatile global commodity prices. Instead, mining industry leaders such as Tedy Badrujaman, CEO of state-controlled Antam, which had its numbers hit hard by the ban on nickel ore exports in 2014, argued that the law not only hurt revenues but also threatened to decimate local economies, particularly in Kalimantan and Sumatra.

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