"Let the bullets fly for a while"

According to the Global Times reporter combing, in addition to the coal export ban imposed for a short period of time in January this year, on May 18, Indonesian Investment Minister and Director of the Investment Coordinating Agency Bashir Rahadalia also announced that Indonesia will ban bauxite and tin exports this year to support the downstream mization of the mining industry. Back in November 2021, Indonesian President Joko said that the Indonesian government would no longer allow bauxite exports in 2022 and ban copper ore exports in 2023. In the schedule announced by Joko, Indonesia will also completely ban the export of raw tin ore in 2024. Bashir's statement means that Indonesia's tin export ban will be implemented nearly two years earlier. Before that, Indonesia has already banned the export of nickel ore in 2020.

Indonesia, one of the world's most diverse mineral countries, has introduced a succession of mineral export bans, which has also raised market concerns. China is Indonesia's number one trading partner, while data from Chinese customs shows that Indonesia is currently the main source of tin, nickel and aluminum resources as well as imported coal for China. Among them, China imported 15.951 million tons of Indonesian coal in April this year, accounting for about 67.76% of the total imports, and Indonesia is still the largest source of imported coal in China. In addition, Indonesia is also China's third largest bauxite imports, in April, China's bauxite (aluminum ore and its concentrates) imports of about 11.131 million tons, of which imports of Indonesian bauxite about 2.419 million tons, accounting for about 19.2% of all imports.

A number of industry insiders in an interview with the "Global Times" reporter, the frequent adjustment of Indonesia's export policy response calm. Analysts familiar with the local situation in Indonesia also said that Indonesia's export ban is generally more involved in domestic interest group disputes, a ban launched, do not be too alarmed, "let the bullets fly for a while".

Ltd. senior analyst Huo Yunbo said in an interview with the Global Times that Indonesia had issued a bauxite export ban as early as 2014, which was later canceled in 2017, and the 2014 export ban had a greater impact on China at that time, because at that time Indonesia was the largest source of bauxite imports to China. But since then, China has gradually turned to Guinea to mine bauxite, and now the bauxite imported from Guinea accounts for about half of China's bauxite imports. Therefore, even if Indonesia completely bans bauxite exports, the bauxite capacity developed by Chinese enterprises in Guinea is fully capable of making up for the gap.

Another industry expert who did not want to be named also believes that Indonesia's bauxite export ban has little impact on China, the expert said in an interview with the Global Times, customs data in 2021 showed that 51% of China's imports of bauxite from Guinea, and Chinese companies in Guinea's bauxite under construction and proposed capacity is very large, if all the aluminum production capacity in Guinea is released, it may even trigger a global oversupply of bauxite, and lead to a sharp drop in prices.

Indonesia has changed

Although Indonesia's mineral export ban is in a wavering state, industry insiders believe that, in the long run, Indonesia's implementation of the mineral export ban is the general trend.

The Global Times correspondent in Indonesia divided Indonesia's export ban into two categories, one is "to use the ban to promote upgrading", and the other is "to use the ban to protect demand and suppress prices". The former mainly targets metal mineral resources, aiming to achieve economic transformation and upgrading through the ban on raw mineral exports, to obtain higher added value of natural resources, which is the general trend of mineral resources export policy changes not only in Indonesia but also in most resource-exporting countries; the latter mainly refers to coal and other energy-based minerals and palm oil, such as agricultural export-oriented mineral resources, because of the international price and domestic price The latter mainly refers to energy-based minerals such as coal and agricultural export mineral resources such as palm oil.

Analysts familiar with the local situation in Indonesia say that before Joko's presidency, Indonesia had long been an important supply base for global upstream raw materials, with very little deep processing of mineral resources. This export model generated a lot of foreign exchange for Indonesia in the short term, but it also put Indonesia into a "resource curse", where only the export of raw minerals was profitable for mine owners, transporters and some Indonesian officials, and the majority of local residents did not benefit from the export of raw minerals. In order to get rid of the "resource curse", the Indonesian government has continuously introduced policies to restrict the export of metal minerals and replaced them with policies to encourage the development of mineral smelting and downstream industries.

"Especially after Joko became the president of Indonesia, in order to attract foreign investment and promote economic transformation, Indonesia accelerated the process of banning the export of mineral resources - foreign countries wanting to obtain Indonesian minerals need to invest in Indonesia first, develop local mineral smelting and downstream industries, and produce in Indonesia finished or semi-finished metal products before the Indonesian government allows exports." The analyst said.

Foreign media previously reported that on the last day of 2021, Indonesia's Ministry of Energy and Mineral Resources suddenly issued a statement to ban Indonesian coal exports from January 2022. Domestic voices in Indonesia believe that coal producers are unwilling to fulfill their obligation to supply 25% of their coal capacity to the domestic market at $70/ton in 2021 when global coal prices are high, resulting in the bottoming out of coal stocks in domestic power plants.

Huadian Bali General Energy Director Chen Xiaoli said in a previous interview with the Global Times that, according to his understanding, many domestic coal power plants in Indonesia are indeed in short supply, and some of them even have less than 10 days of power generation reserves.

The ban on palm oil is similar to the situation, in April, Indonesia's domestic shortage of edible oil and soaring prices, resulting in a high level of domestic discontent, the Indonesian government then banned palm oil exports, giving priority to ensuring domestic demand and price stability.

How Chinese companies are responding

Under the increasingly strict export ban in Indonesia, how should Chinese companies that rely on Indonesian mineral resources adjust their investment patterns and achieve transformation and development?

According to the Global Times reporter, Indonesia began to stop exporting nickel ore in 2020, after which the Indonesian government attracted a large amount of foreign investment to Indonesia to carry out investment in nickel resources development. Among them, the Chinese Qingshan Group and Delong Group, which came to Indonesia in the early years, brought both Chinese advanced technology and capital to Indonesia, helping the local ferronickel and stainless steel industries to be established from scratch, and also building Indonesia into one of the world's major stainless steel exporters.

And the above industry experts do not want to be named to the Green Mountain Group, for example, to the Global Times reporter said that the Green Mountain Group in Indonesia to build the whole industry chain from nickel ore raw materials to intermediate products to finished stainless steel. The expert said that Indonesia's nickel mines are mostly located in Sulawesi Island, the island's industrial base is weak, the Qingshan Group in the local construction of bridges and roads to build power plants, infrastructure construction, the construction of the Qingshan Industrial Park. And in 2014, after Indonesia introduced a law banning the export of raw nickel ore, in order to obtain nickel ore, a number of Chinese companies turned to Indonesia to carry out investment. At this time, Qingshan Group, which has already built infrastructure such as port roads and plants in Indonesia, naturally led Chinese enterprises to achieve cluster development in Indonesia.

It is difficult to say that Indonesia's non-ferrous metal export ban policy will have any substantial adverse impact on Chinese enterprises." The industry expert told the Global Times that Chinese enterprises investing in Indonesia to build mineral smelting and downstream industries is a reflection of China's "international capacity cooperation" concept. Chinese enterprises can combine the development of foreign mineral resources, extend the downstream industry chain, use the local low labor costs to carry out smelting and deep processing of non-ferrous metals, leading to the export of complete sets of equipment. This will not only find a way out for the domestic non-ferrous metal overcapacity, but also contribute to the realization of the domestic "double carbon" target.