BMI View: Indonesia's ban moderation will become increasingly likely as the country's slowing GDP growth will force the government to moderate over the coming quarters .
|e/f= BMI estimate/forecast. Source= UN Data, BMI|
|Mining Industry Value, USDbn||100.19||102.99||106.60||113.53||122.61||134.26|
|Mining Industry Value, USDbn, % y-o-y||-5.00||2.80||3.50||6.50||8.00||9.50|
Latest Developments & Structural Trends
With the boom years in commodity prices behind us, we believe more miners in Indonesia will be forced to put the brakes on investment over the coming quarters. In January 2014, the government implemented the ban on unprocessed minerals, in order to stimulate smelter construction and increase mineral export value. The government has maintained its ban on ore exports given the steady pipeline of nickel smelters coming online which will help soak up mine production capacity. For bauxite, we believe a potential moderation is still on the cards as GDP growth continues to slow ( see 'Bauxite Ban Moderation Beco ming More Likely' Jun 26 2015 ) .The support of the courts in upholding the Mining Law passed in 2009 and the support of newly elected President Joko Widodo and the parliament lends further credence to our view that the ban on ore exports will stay put in the short run. The passing of government regulation 77 in October 2014 that gives foreign players higher foreign ownership for their upstream operations with domestic downstream processing capabilities also indicates that the government is sticking to their guns to encourage the development of the downstream sector.
In the longer term, moderation on the ban still remains a possibility if Indonesia's measures fail to attract enough foreign direct investment to offset the costs it incurs. According to the Indonesian Mining...
The Indonesia Mining Report has been researched at source and features Business Monitor International (BMI)'s mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.
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