Vale: Low grade nickel export give negative impact

By Tri Subhki R

Petromindo|Lucky

IDX-listed nickel mining company PT Vale Indonesia Tbk responded to the newly issued Government Regulation No 1/2017 regarding Fourth Revision of Government Regulation No 23/2010 concerning Mineral and Coal Mining Business Activities. The regulation gives permission for nickel miners to export low grade nickel ores.

Under the implementing regulation, Minister of Energy and Mineral Resources Regulation No 5/2017, domestic smelters are required to absorb nickel ores with grade of less than 1.7 percent up to 30 percent of their installed capacity, and the remainders can be exported.

?The relaxation of nickel ores export ban (even only for low grade nickel) can give negative impact to the growing domestic nickel industry,? Vale?s President Director Nico Kanter said to Petromindo.com on Friday.

Nico noted that the nickel prices dropped once the new regulation was announced on January 12. ?The nickel prices are expected to undergo prolonged drop and will give direct impact to smelter companies in Indonesia and state?s revenue,? he said.

Moreover, Nico said that the requirement to utilize the low grade nickel ores will increase smelter production cost unit, which in turn will make smelter operations less competitive. Nico also emphasized on monitoring and law enforcement to avoid loopholes that in practice may lead to the illegal export of higher grade nickel ores.

?If the situation really happens, it will cause an oversupply condition (in the market) which will mean significant nickel price drop,? Nico said.

Editing by Reiner Simanjuntak