Global Courant
Blurb: Alleged illegal nickel exports to China totaling 5.3 million tonnes and worth Rs 14.5 trillion (S$1.3 billion) generated Rs 575 billion in royalties and taxes.
JAKARTA: Indonesian authorities are reportedly investigating illegal shipments of nickel ore to China worth 14.5 trillion rupiah (S$1.3 billion) over two and a half years from early 2020.
The Corruption Eradication Commission (KPK) recently revealed that between January 2020 and June 2022, approximately 5.3 million tons of nickel ore from Indonesia were illegally shipped to China. royalties and export taxes.
Mr. Muhammad Wafid, the acting director general for mineral and coal mining at the Ministry of Energy and Mineral Resources, said his office is cooperating with related institutions, including the Indonesian Embassy in Beijing.
“We are verifying everything as the export of (nickel ore) is prohibited,” he told Kontan.co.id.
The anti-entity agency initially discovered a significant gap in nickel export values from Statistics Indonesia and China’s General Administration of Customs.
No details of the origin of the nickel ore were shown, but it could have come from nickel mines in Sulawesi or North Moluccas, Indonesia’s largest nickel-producing areas, according to KPK oversight official, Mr. Dian Patria.
The shipments violate an export ban on nickel ore, or raw nickel, that has been in effect since January 2020. Only processed nickel such as ferro-nickel and nickel pig iron may be exported.
The ban was designed to encourage investment in processing facilities and smelters in Indonesia, the world’s largest producer of nickel, a key ingredient in electric vehicle (EV) batteries, and to strengthen local industry.
Nirwala Dwi Heryanto, a spokesperson for the Customs and Excise Office of the Ministry of Finance, said the office has confirmed the finding with its Chinese counterpart and obtained a list of the exporters and will share the result with the KPK.
Professor Irwandy Arif, special staff member of the Minister of Energy and Mineral Resources, said the ministry has made no export recommendations to the Department of Commerce – which has the authority to issue export licenses – since the ban came into effect.
“There is no plan to export nickel ore in the proposed annual budget that has been approved (since January 1, 2020),” he told The Straits Times.
Business groups and experts have called on the government to step up efforts to solve the case and punish those carrying out the illegal shipments to discourage such illegal activities.
Indonesian Nickel Mining Association Secretary General Meidy Katrin Lengkey said the nickel ore may have been shipped to various ports in China using false statements as if it were processed nickel, such as nickel pig iron.
“Only those who process nickel can access international ports and export their products directly,” she told ST.
Weak oversight by authorities responsible for exports, such as the Ministry of Transport and Customs and Excise, may have triggered the breach, she added.
“Exporters reported the manifest documents to the officials. But did they match the actual goods shipped? It’s possible they didn’t,’ Mrs. Meidy said.
Yusri Usman, executive director of the Center of Energy and Resources Indonesia think tank, shares a similar view with Ms Meidy, saying that since the volume of illegal exports was significant, the perpetrators may be linked to nickel processing facilities that export their products directly to the can ship abroad.
“The illegally exported nickel ore was probably less than (the) 1.8 percent concentration the smelter needed,” he told ST.
Ms Meidy said a price difference between domestic and world prices could have caused the illegal shipment.
“The export price has been higher than the domestic price. Therefore, some illegally sold nickel (ore) abroad.”
To address the price gap, her association is preparing for the launch of Indonesia’s nickel price index in 2024, she added.
Mr. Yusri suggested that the government set up an integrated digital nickel information platform that would include data such as nickel production from miners and processors and domestic sales and exports of this equipment. This platform should be accessible to various government institutions to enable tighter supervision and discourage illegal exports.
Indonesia has 21 million tons of nickel reserves, nearly a quarter of the world’s reserves, according to the US Geological Survey.
Recently, the International Monetary Fund (IMF) advised the country to end its nickel export ban, as the increased foreign investment has not yet had a significant impact, such as creating jobs for Indonesians. At the same time, the ban has led to corruption and rent-seeking, the IMF said.
However, Indonesian officials have defended the policy.
In recent years, Indonesia has received billions of dollars in foreign investment from companies eager to produce EVs and batteries in the country.
