Indonesia Stands Firm, Raw Mineral Export Ban Despite WTO Dispute
- 19-Jan-2023 1:43 PM
- Journalist: Nicholas Seifield
Jakarta (Indonesia): On Wednesday, Minister of Investment and BKPM head Bahlil Lahadalia announced the upcoming Indonesian government ban on Bauxite ore exports in 2023. This was made in front of key investors at the Indonesian Pavilion at the 2023 World Economic Forum (WEF) Annual Meeting held in Davos, Switzerland.
"Even though we lost at the World Trade Organization (WTO) regarding Bauxite ore export, we fought again, and we inform that this year, the Indonesian government has decided to ban the export of Bauxite ore," he informed while making a presentation during a panel session. "Indonesia Economic Development Through Downstream Industries and Inclusive Partnership,” He spoke during a panel session from Jakarta on Wednesday
Lahadalia also urged for tolerance and understanding towards the Indonesian government's adoption of this policy to encourage domestic downstreaming.
"Even if this case will be brought to the WTO, we will be fine because we have learned from other developing countries," he added.
He alluded to how several developed countries had implemented such policies to protect their domestic industries in the past. For instance, England, which in the 16th century, outlawed the export of wool as it intended to use the raw material for textiles production. This information was relayed during a panel session from Jakarta on Wednesday. Similarly, China set a Domestic Component Level (TKDN) requirement of up to 90 percent on products in the 1980s, to bolster its domestic industry.
"No one is stopping them either. Indonesia and developing countries are eager to reach the same results with the developed countries. This is what we are doing now," he emphasized.
The minister suggested that the WTO lawsuit brought against Indonesia by the European Union is not a major concern, as the government recognizes that downstreaming can help elevate the nation's status from a developing to a developed country.
"Indonesia is very concerned about the sustainable development goals (SDGs) and aims to achieve them by 2030. The SDGs should not only be focused in the environmental sector but also on the distribution of economic growth where there are natural resource areas," he disclosed.
He also highlighted the importance of collaboration in driving economic growth and ensuring that Indonesian citizens receive maximum benefit from it. Recently, President Joko Widodo declared that Indonesia would bar the export of Bauxite ore commencing June 2023, as an effort to give a boost to its domestic processing industry.
"Starting in June 2023, the government will impose a ban on Bauxite ore exports and encourage the domestic Bauxite processing and refining industry," he said.
According to Coordinating Minister for Economic Affairs Airlangga Hartarto, there are currently four operational Bauxite refining facilities with an alumina capacity of 4.3 million tons. Additionally, Indonesia is constructing a new Bauxite processing facility that has an input capacity of 27.41 million tons and a production capacity of nearly 5 million tons.
"We have a big Bauxite reserve at 3.2 million tons that can fulfill a capacity of 41.5 million tons. Of the 8 smelters prepared, there are still 12 other smelters with the durability of our Bauxite is between 90–100 years," Hartarto added.
Additionally, Bauxite ore will be processed into alumina, then converted to Aluminum or Aluminum ingots, followed by the development of derivative products such as bars or flats. These will be supplied to industries with existing ecosystems, including the machinery and construction sectors.