Jakarta, June 6 (ZXS) -- Indonesia is the world's largest bauxite producer and exporter, but since June 10, the country's government has begun to implement a ban on bauxite exports.
Indonesian President Joko Widodo has said that the ban on bauxite exports was imposed on multiple considerations. This policy can increase the added value of natural resources, increase jobs, increase foreign exchange earnings, promote economic growth, etc.
This is not the first time Indonesia has "banned aluminum". As early as 2009, Indonesia had a ban on the export of unprocessed minerals. In 2014, the country first imposed restrictions on bauxite exports, which were later lifted in 2017.
Objectively speaking, Indonesia's own aluminum processing capacity is insufficient, and the challenges and impacts brought by "one-size-fits-all" cannot be underestimated.
Hoping to get rid of the "resource curse"
Indonesia has long profited by exporting raw mineral products. In 2022, Indonesia's bauxite production was 2770.780 million mt, but only <>.<> million mt was absorbed domestically, according to official data.
This creates a large amount of foreign exchange for Indonesia in the short term, but at the same time puts Indonesia in a "resource curse". According to statistics, in 2019, the mining and coal industries contributed only 5% to Indonesia's GDP.
Bauxite is an ore used to produce aluminum. The Indonesian government hopes to promote transformation and upgrading through the "ban" - leaving high value-added things in the local area, attracting companies to build factories in Indonesia, increasing taxes and employment, and finally getting rid of the "resource curse".
But the 2014 ban didn't go as it had been promised. On the one hand, enterprises that rely on Indonesian imports "have no rice under the pot", and turn to a multi-point layout around the world. On the other hand, Indonesia has only added one new smelter, but export earnings have fallen sharply and the economy has suffered. The ban was lifted in 2017.
In recent years, high-level officials of the Indonesian government have frequently mentioned the issue of mineral export bans. The Indonesian government has also introduced relevant laws to this end.
In December last year, the long-awaited "aluminum ban" order was announced and was scheduled to be implemented on June 12 this year. According to the Indonesian government's estimates, the development of bauxite downstream industry will bring the country's revenue from about 6 trillion rupiah per year to about 10 trillion rupiah per year.
Can the "ban on aluminum" replicate the "ban on nickel"
In the early years, Indonesia exported nickel raw ore, with an annual export value of only US$11.2020 billion. However, after the ban on nickel ore exports in January 1, the value of nickel industry exports jumped to US$2021.209 billion in 2022. In 300, Indonesia's nickel industry exports exceeded US$<> billion.
The success of the "nickel ban" has become a strong basis for this "aluminum ban". Jokowi has repeatedly mentioned the huge economic benefits brought to Indonesia by the "nickel ban", including a significant increase in the added value of mineral products, the creation of new jobs, the upgrading of economic grades, and even the balance of Indonesia's trade relations with major trading partners. When he announced the "ban on aluminum" policy, he also used the "ban on nickel" as an example.
But can Indonesia's "ban on aluminum" replicate the success of the "nickel ban"? Indonesia's Ministry of Energy and Mineral Resources estimates that the policy will affect about 2000 million tons of bauxite.
Absorbing 2000 million tons of bauxite is not an easy task. Just on June 6, Indonesia's Minister of Energy and Mineral Resources Arifin said that there are currently four smelters in operation, but they are not yet fully operational due to raw material supply shortages. According to the Ministry's verification, the construction progress of seven bauxite smelters did not match the reports to the government. A further eight refineries are under construction.
Indonesia's Institute of Economic and Financial Development (Indef) believes that the ban's intentions are good, but it is too early to implement it. Bauxite processing and refining facilities in Indonesia are still scarce.
Jokowi also admitted that Indonesia will experience a decline in exports of this commodity in the early stages of the continuous ban on primary bauxite exports. But after two or three years, the benefits will be felt.
The list of "prohibited exports" is getting longer and longer
Indonesia is an important energy exporter. But the country's list of "prohibited exports" of energy minerals is getting longer and longer.
Earlier this year, Indonesia's investment minister and director of the Investment Coordination Agency, Bahelil, said that by 2040, at least 21 strategic goods would be banned from being exported in raw materials. It is mainly distributed in 8 fields such as minerals, coal, petroleum and marine.
Historically, some export bans have often been in a swinging state. For example, the ban on palm oil exports will only be implemented for 3 weeks; The coal export ban, which lasted less than a month.
How long this "aluminum ban" will last is unknown. In recent years, the Indonesian government has continuously introduced policies to restrict the export of metal minerals, replacing them with encouraging the development of mineral smelting and downstream industries. Industry insiders believe that if not adequately prepared, the ban could backfire.
Ronald Sulistyanto, acting president of the Indonesian Bauxite and Iron Ore Entrepreneurs Association, has said that building a smelter that conforms to law and order is not as easy as turning the palm of your hand.
The current economic environment is also not conducive to Indonesia's implementation of the "aluminum ban". Not long ago, Indonesia lowered its economic growth target for next year: keeping the expected upper limit of 5.7%, but lowering the lower limit from 5.3% to 5.1%. (End)