Indonesia plans to impose export duties on ferronickel and nickel pig iron

The Indonesian government plans to impose a progressive tax on nickel exports. The policy starts with a 2 per cent tax rate on nickel products, (NPI) and ferronickel, this year.

Septian Hario Seto, Deputy Minister of Investment and Mining of (Kemko Marves) of the Ministry of Maritime and Investment Coordination, explained that the government had two main objectives in imposing progressive taxes on nickel pig iron and nickel iron.

"first of all, we want to push nickel further downstream. We want to encourage investment not only in BOP and Ferro Nickel, but also in nickel products with higher added value, "he explained.

Nickel is a kind of non-renewable natural resource. As a result, Seto says, when nickel is extracted and exported, the government will naturally stimulate the industry to produce nickel with higher added value.

The second goal is to maintain the elasticity of nickel reserves. As we all know, the number of nickel processing plants using sapropelic nickel ores as raw materials to produce pig iron and nickel iron is increasing, but the reserves of sapropelic nickel ores have not increased significantly.

According to Seto, the current capacity of NPI and ferronickel smelters is very large. If all companies build smelters (pig iron and nickel iron), processing plants and refineries will have more capacity and, of course, extract more nickel ore. "as a result, nickel ore reserves will soon be exhausted. If this trend continues, reserves are expected to be depleted by 2040. " He said.

The Government also uses this progressive tax tool so that Indonesia does not build large smelters, which in turn leads to oversupply and lower commodity prices. Later, Seto said, this progressive tax will apply when nickel reaches a certain price.

At present, the government is trying to exercise it at a price of $15000-$16000 a tonne and impose a 2 per cent tax, which will then continue to rise as the price of nickel soars.

So far, Seto says, progressive taxes are levied only on the balance of payments and Nickel Iron. However, his party does not rule out the possibility of a progressive tax on nickel matte, so it is still in the evaluation stage.

"however, we are currently studying our proposed nickel, pig iron and nickel iron," he said. Seto confirmed that a progressive tax would be implemented this year. However, he did not specify when the policy would be implemented.

Rizal Kasli, president of the Indonesian Association of Mining experts, suggested that the import and export tax should not be based on the type of product produced, such as nickel pig iron or nickel iron. However, export taxes are levied on processing plants whose raw materials are sapropelic nickel, that is, those that use pyrometallurgical technology.

"this means that nickel products in the form of nickel matte, such as nickel matte, are also made from rotten nickel and are subject to export duties, such as NPI and Ferro nickel." He said.