Jakarta – In a surprising move, the Indonesian government has announced a ban on all bauxite exports starting in June 2023 to encourage domestic processing industries.
President Joko "Jokowi" Widodo announced on Wednesday, stating, "Starting in June 2023, the government will implement a ban on bauxite ore exports and encourage the processing and purification of bauxite ore within the country."
He was accompanied by the Coordinating Minister for Economic Affairs, Airlangga Hartarto, and the Minister of Energy and Mineral Resources, Arifin Tasrif, when making the statement from the Merdeka Palace in Jakarta.
This unexpected decision has sent shockwaves through the global aluminum industry, as Indonesia is among the world's largest exporters of bauxite, the raw material used to produce aluminum. The ban is expected to significantly impact the global aluminum market, leading to price increases and supply disruptions.
Jokowi emphasized the government's commitment to sovereignty over natural resources and increasing value-added within the country, particularly in creating as many job opportunities as possible, increasing foreign exchange receipts, and promoting more equitable economic growth.
"Therefore, the government continues to strive to increase the country's processing industry of natural resources. Raw material exports will continue to be reduced, and the downstreaming of natural resource-based industries within the country will continue to be increased," he said.
The government has implemented a ban on nickel ore exports since January 1, 2020, with positive results.
Widodo noted that the value of nickel exports, which were only Rp 17 trillion ($1.1 billion) at the end of 2014, rose to Rp 326 trillion in 2021, an increase of 19 times. The value of nickel exports is expected to exceed Rp 468 trillion this year.
"This is only one commodity. This kind of success will be emulated for other commodities," Jokowi said.
The domestic industrialization of bauxite is expected to increase state revenues from Rp 21 trillion to approximately Rp 62 trillion.
"The government will continue to consistently carry out downstreaming within the country so that value-added is enjoyed within the country for the advancement and welfare of the people," Jokowi said.
Indonesia held a bauxite reserve of about 1.2 billion metric tons in 2021, or 3.75 percent of the global reserves, and the 7th largest in the world after Guinea, Vietnam, Australia, Brazil, and Jamaica, data from the US Geological Survey showed.
The Southeast Asia country mined 18 million metric tons last year, down 20 percent from 20.8 million a year earlier. Indonesia exports most of its ore overseas and is currently the second largest exporter in the world after Australia, accounting for about 31 percent of the market.