UPDATE 1-EU escalates WTO case against Indonesia over export curbs

(Adds EU Commission comment, case background)

BRUSSELS, Jan 14 (Reuters) - The European Union escalated its challenge at the World Trade Organization on Thursday over Indonesia’s export ban on nickel ore by requesting the Geneva-based trade body form a panel to adjudicate on the case.

The bloc launched its initial complaint in Nov 2019 against the export restrictions on raw materials, notably nickel ore and iron ore, that are used to make stainless steel.

The European Commission, which coordinates trade policy for the 27-nation European Union, said Indonesia’s export ban on nickel ore and domestic processing requirements for nickel ore and iron ore were illegal and unfair for EU steel producers.

“The fact is that no WTO member is permitted to restrict exports of raw materials in this way, imposing illegal restrictions to favour domestic producers,” EU Trade Commissioner Valdis Dombrovskis said in a statement.

The request for a panel follows a period of consultations from Jan. 30, 2020, which failed to resolve the issue. A ruling of the panel would likely be at least a year away.

The EU stainless steel industry was producing at its lowest level for 10 years, while Indonesia was set to become the second largest global producer after China due to unfair measures, the Commission said.

The $20 billion EU stainless steel industry employs some 30,000 people directly, with major players Acerinox, Aperam, Outokumpu and Acciai Speciali Terni.

Separately, the EU imposed duties on hot-rolled flat stainless steel from Indonesia in 2019 and launched an investigation in September into cold-rolled stainless products from Indonesia. (Reporting by Philip Blenkinsop, editing by Marine Strauss, William Maclean)