Indonesian President Joko Widodo may be a hero to many, but, surely, not all would agree. The Indonesians, especially Jokowi’s followers, and the mining companies benefiting from the ban may be happy about his bold policies, but most steel makers aren’t.
The clamor began soon after Indonesia announced that it would now localize its ore production. China and Japan made their respective bold moves to persuade Indonesia to mull over a possible lift, but both their efforts ended up futile. Economists and market players are now anxious about the future of nickel, whether its soaring prices amidst the ban would benefit the investors in the long run. Smaller ore producers, however, have grabbed the fleeting chance of a lifetime of having Indonesia’s former clientele on their side. Small companies like Amur Minerals Corporation (AMC) and Asian Mineral Resources(ASN) are enjoying the popularity they are getting as industry’s favourite small players that could possibly alleviate the looming deficit in July.
President Widodo’s motive behind the ore ban is simple: enhance domestic manufacturing, intensify the local mining industry and encourage industrial development by pushing mining firms to build smelters. And why not? Indonesia is the largest laterite nickel ore supplier in the world and gathering all the products inside its constraints would boost many local steel companies’ production. This would also increase the local mining industry’s confidence towards autonomy, and that by supplying solely to local company is enough to be lucrative. Indeed, exports of minerals remains sluggish in the face of the government export ban on raw minerals, but this is what Jokowi wants: to let his nation experience and enjoy its country’s very own resources.
However, Jokoko’s decision is met by criticisms from local and international environmentalists, those who are, at all costs, anti- mineral excavation and mining. Several anti-administration factions also say that Jokoko’s decision would not only hurt foreign relations but also local employment rate, given that there have been job losses recorded after the ban was enacted. Another criticism is that the ore ban is anti-small miners, as this would benefit only large and established mining firms that have long been forged partnerships with local nickel consumers; most small local mining firms, especially, the start-ups, have sought initial clientele from steel producers abroad. Smaller mining companies are also complaining that the overlapping mining regulations in the country discourage them to build local smelters despite their willingness to obey the new law.
But it is the local economists who are most agitated on the possible extension of the ban. The Indonesian economy could lose billions of dollars of much-needed export revenue that could support various local government projects such education system enhancement, poverty alleviation, and solving the longstanding problem of corruption.
But, as the administration and its supporters would say it, everything is under control and going as planned. And there could be a hint of reality in this, especially now that the country’s economy is soaring. In fact, Indonesia is now viewed as the next China of Asia, the next superpower the world must watch for.
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