Jokowi's Policy Could Spell Trouble for China's Industry, Indonesia Bans Export of Bauxite Ore
- 23-Jan-2023 12:51 PM
- Journalist: Jacob Kutchner
Jakarta Indonesia: President Joko Widodo (Jokowi) of Indonesia has implemented a policy that affects the export of Bauxite ore abroad. This policy, which comes after the success in the domestic nickel commodity, will stop the faucet for raw mineral exports and gassing.
According to records from the Association of Indonesian Mining Experts (Perhapi), 40 million tons per year of Bauxite ore is produced with 35-36 million tons exported to China. Unfortunately for China, this means that starting from June 2023, they won't be able to absorb tens of millions of tons of Bauxite ore anymore because of Jokowi's policy.
"The country that currently imports Indonesian Bauxite ore is China. So, if the export ban is carried out in 2023, it is certain that China will be the one who will suffer losses because the factories will experience a shortage of Bauxite ore stocks to be processed," Rizal Kasli, the Chairman of the Association of Indonesian Mining Experts (Perhapi).
It is well known that President Jokowi's policy of banning the export of Bauxite ore reinforces the provisions in Law Number 3 of 2020 concerning Mineral and Coal Mining (Minerba), which mandates downstream development through the construction of domestic mineral processing and refining facilities (smelters).
"This ban will indeed inconvenience China, but Indonesia is not the only country that exports Bauxite ore to China. Among them are Australia, Brazil, Guniea, Vietnam. "Indonesia controls 4% of the world's reserves," stated Rizal.
China's industry makes use of the profits from exporting Indonesia's Bauxite ore to create intermediate products consisting of smelter grade Alumina (SGA) and chemical grade Alumina (CGA).
"That can then be reprocessed into Aluminum ingots and chemicals to produce other manufactured products such as vehicle engine blocks, construction, household appliances," stated Rizal.
The policy to ban the export of Bauxite ore will also reduce the country's foreign exchange earnings between US$1 and US$1.5 billion, depending on global market prices. President Jokowi, however, is not deterred by this. He believes that downstream Bauxite could bring a significant increase in state revenue with industrialization at home. According to his estimates, state revenues could skyrocket to around IDR 62 trillion compared to IDR 21 trillion of recent years.
