Indonesia’s bauxite ban risks WTO complaint but won’t rock global supply

President Joko Widodo says the export ban will encourage the domestic bauxite processing and refining industry

While the move will spark a likely retaliation or fresh complaint to the WTO, some experts say it reflects Indonesia’s commitment to developing its industries

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President Joko Widodo says Indonesia
will not hesitate to ban mineral exports to develop the domestic refining industry. Photo: Getty Images

Published: 8:05pm, 21 Dec 2022Updated: 8:15pm, 21 Dec 2022

Indonesia’s decision to ban exports of bauxite ore in pursuit of a value-added strategy for the commodity is likely to trigger complaints at the World Trade Organization (WTO), but the protectionist move reflects a clear vision by the government to develop its industries, analysts say.

Last year, Indonesia produced 25.8 million tonnes of bauxite, making it the world’s sixth-largest producer, with 90 per cent exported overseas. The ban will also cover bleached bauxite.

The restrictions which take effect next June are part of the government’s broader plan to create jobs, increase revenue, and develop its own domestic processing and refining industry, President Joko Widodo said on Wednesday.

A tractor at a bauxite mining site in West Kalimantan, Indonesia. Photo: Shutterstock/File

“From the industrialisation of bauxite in this country, we estimate that state revenue will increase from 21 trillion rupiah (US$1.3 billion) to around 62 trillion rupiah (US$3.9 billion).”

Widodo said the latest commodity ban would replicate the country’s “success” in banning nickel ore in January 2020.

Indonesia has been pursuing a so-called “downstreaming” policy, in which the country reaps more revenue from adding value to raw materials it produces, as miners and producers are obliged to build refining facilities onshore.

Chinese firms dominate Indonesia’s nickel industry. In the third quarter of this year, a majority of the 1,150 new Chinese investment projects were in nickel smelting and downstream processing industries, worth US$1.56 billion.