October 24, 2019 / 6:41 AM / 25 days ago

UPDATE 1-Indonesia to revise domestic nickel ore rule to put floor on price

* Govt aims to revise rules by Jan 2020

* Benchmark price will likely be a floor price for ores (Adds details, context on rule change)

JAKARTA, Oct 24 (Reuters) - Indonesia’s mining ministry is revising a rule that governs the domestic price of nickel ore to ensure smelters follow government benchmark prices, a ministry official told Reuters.

The move comes after nickel miners complained to the government that domestic smelters were pushing down the price of ore, making prices very unattractive in the home market.

The government is aiming to have the revision issued by January 2020 when a ban on exports of nickel ore takes effect, Yunus Saefulhak, director of minerals at Energy and Mineral Resources, said in an interview late on Wednesday.

Indonesia aims to establish a fully integrated nickel industry onshore by processing the ore into metals and chemical used in batteries for electric vehicles (EVs) and building EVs locally, but policy changes have had ramifications for domestic and internerational nickel trading. .

The government’s planned revision to the rule will make the benchmark price the floor price which must be used for ores trade, said Saefulhak.

Indonesia’s ban of exports of unprocessed nickel was brought forward from the earlier schedule of January 2022 as part of the government’s push to develop and expand the onshore smelting industry.

“We already have benchmark prices, but they are not complied with,” Saefulhak. “We will make the wording firmer so there are no more below-normal prices,” he said.

The government wants to avoid problems that might arise from low ore price as miners tend to cut safety and environment management costs when prices are low, he added.

The nickel miners association (APNI) said that up to July this year, low grade nickel ore were priced at an average $15 per wet tonnes while the government ore benchmark price moved within the range of $25.4 per wet tonnes to $28.96 between January and July.

Saefulhak said the government is also reviewing the formula for calculating the bechmark price to account for both mining and smelting costs.

“We need to find the balance because we also want to keep the price attractive for smelters who have invested in Indonesia,” he said. (Reporting by Fransiska Nangoy, Wilda Asmarini and Bernadette Christina Munthe; Editing by Shri Navaratnam)

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