(Bloomberg) -- Indonesia, one of the world’s top supplier of nickel ore, will allow miners to continue exports until a ban takes effect on Jan. 1 and ordered greater scrutiny of cargoes meant for shipments.
Exports will be halted for about two weeks to inspect cargoes as there has been a surge in the line up of shipments, Coordinating Minister for Maritime and Investment Luhut Pandjaitan told reporters in Jakarta on Tuesday. The government won’t issue fresh permits for exports until it completes the scrutiny and verify the progress of smelter construction, Energy & Mineral Resources Minister Arifin Tasrif said.
Nickel prices swung from London to Shanghai after an Indonesian official on Monday said exports of the ore used in batteries and stainless steel would be suspended immediately. The metal pared gain early Tuesday following comments from the nation’s Coordinating Minister for Economic Affairs Airlangga Hartarto that the ban will only kick in from Jan. 1.
This isn’t the first time that Indonesia has flip-flopped on its ore exports. The government imposed a blanket ban on shipments in 2014 only to relax it in 2017, allowing overseas sales of surplus, lower-grade nickel ore of below 1.7% to finance smelter construction. As a consequence, the nation slipped from its top spot as the world’s biggest nickel exporter.
Prices surged in September to the highest since 2014 after President Joko Widodo’s government said the ban would kick in from the start of 2020, setting off a scramble for supplies and a drawdown of LME-tracked holdings.
Monthly shipment of nickel ore surged to 100-130 cargoes a month since the announcement of the ban in late August and officials now suspect traders were shipping out ore with nickel content of more than 1.7% in violation of existing rules, Pandjaitan said. Even miners, who have no plans to build smelters, too were suspected to be exporting the ore by manipulating the shipment quotas, he said.
Three-month nickel was up 0.4% at $16,710 a ton on the LME at 11:19 a.m. London time, down from an earlier gain to as much as $17,000 a ton. The metal remains the best performer among major base metals by far in 2019 after rallying 56%.
--With assistance from Rieka Rahadiana.
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