Ministry to require smelters to buy low grade nickel ores

Petromindo|Lucky

The Ministry of Energy and Mineral Resources (MEMR) plans to require domestic nickel smelters to absorb low grade nickel ores with purity of 1.7 percent by up to half of their installed production capacity, Kontan reported on Saturday.

The paper quoted Director of Development of PT Indoferro, Jonatan Handojo as saying that plan will be implemented through the upcoming revision of Ministerial Regulation No 08/2015 on Increasing Added Value of Minerals through Domestic Smelters.

He said that the government announced the plan during a meeting on Wednesday with the Indonesian Refinery and Processing Industry Association (AP3I).

He said that the ministry wants the low grade nickel ores to be able to be absorbed by the domestic market by issuing a new regulation that would oblige all domestic smelters to buy the ores. The domestic smelters will be required to buy lower grade nickel ores up to half of their installed production capacity, and the remaining half for higher purity nickel ores.

Jonatan said that the planned policy would create difficulties for the smelter operators as only the blast furnace can absorb the low grade nickel ores, while the electric furnace (RKEF) smelters cannot.

There are currently 15 blast furnaces in the country, and five RKEF smelters, which have much higher capacity that the former group.

Director General of Mineral and Coal at the ministry Bambang Gatot Ariyono confirmed the planned new policy, but declined to provide details, saying that the new regulation is still being drafted.

IDX-listed mining company PT Aneka Tambang Tbk (Antam), which produces low grade nickel ores welcomes the planned new policy, saying that without such regulation, smelter companies tend to only buy low grade nickel ores.

The government has previously rejected a proposal for miners to be allowed to export low grade nickel ores amid difficulties in selling them at home. (*)