Faisal Emzita - Indonesian Nickel Association - Latest on Indonesia’s Nickel export ban and smelter construction activities

24-25 May 2016, Grand Hyatt Shanghai

email: [email protected] hp +6282110270050

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INSG data show that one of the noticeable changes in the pattern of use for nickel in recent years has been the growth in China. In 2000 China accounted for less than 6 per cent of global usage, today China accounts for about half of global nickel usage. This surge in nickel demand in China has been accompanied by the growth of the nickel pig iron (NPI) industry which is based on the input of laterite ores imported from Indonesia and the Philippines. As the market for metals has expanded in China, the financial markets have also evolved. The Shanghai Futures Exchange has added contracts for nickel, thus allowing local traders improved access to the commodity markets and expanding the role of the Chinese nickel market in the global market.


The Indonesian Ban was the turning point for the nickel market. No immediate effect due to high inventories and supply from the Philippines and the introduction of Blending Techniques. Under the investment in 2012-2013 will result in lower nickel supply in the next 3-5 years . New Project 2015-2017 in Indonesia and elsewhere will only compensate in part the loss of Indonesian feed. China will continue to be the main market for nickel representing more then 50% of total primary nickel usage. The “Big 15” nickel operation, more then 60%of supply in 2005, have actually shrank by 11% and are likely to continue to decline going forward with little expansion potential. Nickel market will depend on Indonesian, Philippines and lower grade sulphide projects.



Jokowi: Shift in Economic Paradigma



The agenda is to lift the economy, build Infrastructure, reduce inequality, improving spending, cut corruption, bureaucracy reform and more bureaucracy efficiency

THE MINERAL ADDED VALUE POLICY


USGS statistics, the global nickel reserves is about 74 million tons, and there is 3.9 million tons in Indonesia, accounting for 5.28%, ranking sixth.

Source: MoMER 2016


Source: MoMER 2016


Source: MoMER 2016


From the Investor’s Perspective on setting up a Smelter in Indonesia 1. Economic Development in the country 2. Abundant Resources 3. Cost 4. Close to Consumption and this is the driving forces of world Industrial transfer* As an economy industrializes, demand moves from more basic materials like carbon steel into stainless steels and ultimately into specialty alloys that require a lot of nickel and drives also non-stainless nickel consumption

*Zhiqiang Ding, Baosteel Resources @Smelter Summit 2016 Jakarta


Source: MoMER 2016


Source: MoMER 2016


Source: MoMER 2016



Source: MoMER 2016


Most nickel market analyst predicted Indonesia to become largest nickel producer and one of the world’s largest stainless producers but when, how long and how many billions would it need? It took China 7 years to get to the level of 2014-15, why expect Indonesia is going to do faster with less infrastructure in place – should it take 10 years? 15 years?* Will Philippines also implement ore export restriction? What level of saprolite exports can be supported? What level of mining activities will communities allow to occurs. And the impact on Neo Caledonia relaxation


The issue of Relaxation of Export Ban Exception for export of certain processed minerals: Copper, Iron ore/sand, Manganese, Lead , Zinc • Export tax instead applies • Only until January 12, 2017 • There is no exception for nickel, bauxite, tin, gold, silver and chromium

Michael S Carl, SSEK Law Firm INSG Lisbon 2016



Government’s plan to pause the issuance of mining permits A moratorium on mining permits may be the mining sector’s solution for keeping its head above water on the back of weak commodity prices. Data from the Energy and Mineral Resources Ministry show that there have been 10,364 mining licenses ( IUP ) issued, 3,960 of which carry a non-clean and clear ( non-CnC ) status, leading to over-mining and oversupply and, eventually, lower commodity prices. Of the licensed, non-CnC mines, 2,799 are mineral businesses and 1,161 are coal businesses. “Before putting the moratorium in place, the government must first revoke existing non-CnC permits. This is the right moment, while prices are still low”


Draft the New Law


CONCLUSSIONS The continuing interest of investors in mining industries specially nickel must be stimulated by the Indonesian Government especially to develop and sustain nickel industries in the long term. Nickel is use in more then 300.00 product and getting more. Nickel sulphide is depleting and lateritic nickel is non renewable. Low commodity prices, India growth and ASEAN Single Market can promote stronger demand growth on nickel. World Demographic. The Ban brought to rethinking, what can be reform, find new ways to revive and rebounds. Look for Innovation and new technology – think out of the mainstream , and think out of the box. More Global, more sustainable, more accountable and more transparencies approach are the KEY WORDS.


Nickel-containing materials and products can help to shape and response to global challenges. The advantages inherent in nickel-containing materials are due to the characteristics of nickel which is durable and long lasting. In alloyed forms, nickel alloys are infinitely and 100% recyclable. In the shaping of public policy to address global challenges around resource efficiency there is a need to recognize the attributes of nickel in helping to meet the goals.


Many Questions Surrounding the Future

Who are investing, where and how serious is the investments undertaking

How to overcome constraint on infrastructure

like electricity, water, road, technology, skill and manpower

Are the Nickel Prices good enough to maintain incentives for mine production investment and expansion


And how Commit & Consistence is the central and local Government on the Domestic Obligation in Mineral Processing and Extractions Policies

How is the Community excepting the mines and processing activities.

Fiscal Incentives, friendly Investment Climate and Political Stability

Last but not lease the world economy and China



Thank you! - Questions & Answers


Annex


MEMR beginning 2015


MEMR beginning 2015



Fan Runze, Manila Nov. 2015

Fan Runze, Manila Nov. 2015


MEMR: the 12 nickel smelting plant put into operation 2015 1. PT Indoferro 2012 , 2. PT Cahaya Metal Modern Industry 2014, 3. PT Sambas Mineral Mining, 4. PT Macika Madana Mineral Industry, 5. PT Karyatama Konawe Utara, 6. PT Bintang Delapan Mineral, 7. PT Fajar Bhakti Lintas, 8. PT Gebe Industry Nickel, 9. PT Antam, 10. PT Asia Mineral Mining, 11. PT Pernick Sultra, 12. PT Mapan Asri. Ferronickel Industry is transferring from China to Indonesia*


Business

Faisal Emzita - Indonesian Nickel Association - Latest on Indonesia’s Nickel export ban and smelter construction activities