Study Shapes Debate of Indonesia’s Mineral Processing Regs News Feed

Economic Impact of Indonesia's Restrictions on Mineral Exports

March 28, 2014—An April 2013 report by Nathan Associates is shaping opinion on the impact of Indonesia’s controversial regulations governing mining processing and exports. Produced for the U

The study examines the likely impact of a 2009 law and its implementing regulation of 2012, which included a controversial ban on raw mineral exports. The goal of the law and regulations is to induce in-country processing of minerals. Focusing on bauxite, copper, and nickel the study evaluatesSAID-funded Support for Economic Analysis Development in Indonesia project, the report has been cited in The Economist (Smeltdown: Mining in Indonesia) and the World Bank’s Indonesia Economic Quarterly (March 2014) (pages 22-28).

  • The financial feasibility and commercial viability of creating more processing facilities (smelters and refineries),
  • Economic welfare losses that the export ban will cause, and
  • The economic implications of a forward linkage policy.

In its recommendations, the report advises against “blunt, across-the-board policies” in favor of policies that apply to specific minerals that hold promise for profitability and higher export earnings.

Since the report’s publication in 2013, new regulations have narrowed the range of what is banned from export and imposed export taxes that rise over time.

Click here to read the executive summary of the report.

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