Global Courant 2023-05-30 13:55:00
JAKARTA – Indonesia, the world’s largest nickel producer, has suspended plans to tax exports of nickel products as it works to create a price index to reduce volatility linked to the London Metal Exchange (LME) benchmark, a high government official Tuesday.
The government plans to launch a nickel price index by the end of 2023 and it needs to be there before going ahead with an export levy. conference in Jakarta.
The index could be used to calculate royalties and any export taxes, Septian said.
“The index will be created by the end of the year. We are still asking for each index provider’s proposal. We’ll see who’s the best,” he told reporters on the sidelines of the conference.
Indonesia produces a wide variety of nickel products, most of which are of a lower “Class 2” purity than the underlying “Class 1” product for the global benchmark nickel contract on the LME, which has explored the need for a price reference to cover the lower classes.
Indonesia’s move to create the index comes in response to calls from consumers, producers and traders after the LME suspended nickel trading for more than a week in March 2022 when prices posted a record-breaking increase, Septian said.
“Since the LME incident last year…we’ve had a lot of feedback from smelters,” he said.
Mr Septian said the index was necessary because the discount between the LME price for refined nickel and the market price of pig iron nickel, the main nickel product traded in the world and mostly made in Indonesia, was highly volatile.
Mr Edric Koh, head of LME corporate sales in Asia, who also spoke on the sidelines of the conference, reiterated that LME was considering responding to market demand for a lower quality contract.
“There have been some market participants asking for a Class 2 contract, so we are looking into this very closely with the nickel community,” Koh told reporters.
Mr Septian said the index could include nickel pig iron, mixed hydroxide precipitate and possibly nickel matte. REUTERS
