Supply Chain of Domestic Nickel Ore - Antonius Setyadi

1.
Background
2. Distribution of Nickel Potential in Indonesia
3. Distribution of IUP Nickel in Indonesia
4. Conclusion
NO PROVINCE NICKEL IUP RESERVES
( OP & Exploration ) ( Ni > 1.4% )
1 SOUTHEAST SULAWESI 528 974.015.930
2 SOUTH SULAWESI 2 31.600.000
3 CENTRAL SULAWESI 439 765.252.000
4 NORTH MALUKU 300 797.202.611
5 MALUKU 5 82.012.295
6 WEST PAPUA 2 125.000.000
7 PAPUA 2 210.000.000
TOTAL 1.278 2.985.082.836

*Sources: Provincial ESDM Office
1. Nickel is a very strategic commodity, because it is not replaceable and
non-renewable.
2. Nickel mining is very damaging to the environment.
3. Indonesia is one of the top 10 nickel producing countries and is the
world's number six nickel exporter with production value in 2016
reaching 168,000 Metric ton.*
Volume (metric ton) nickel content

Country 2016
2010 2011 2012 2013 2014 2015 2016 Ranking
Philippines 173,000 270,000 330,000 446,000 523,000 554,000 500,000 1 Based on data from
Russia 269,000 267,000 270,000 275,000 239,000 269,000 256,000 2
Canada 158,000 220,000 220,000 223,000 235,000 235,000 255,000 3
the US Geological
Australia 170,000 215,000 230,000 234,000 245,000 222,000 206,000 4 Survey, Indonesia's
New Caledonia 130,000 131,000 140,000 164,000 178,000 186,000 205,000 5
nickel production in
Indonesia 232,000 290,000 320,000 440,000 177,000 130,000 168,500 6
Brazil 59,100 109,000 140,000 138,000 102,000 160,000 142,000 7 2016 ranked 6th in
China 79,000 89,800 91,000 95,000 100,000 92,900 90,000 8 the world with a
Cuba 70,000 71,000 72,000 66,000 50,400 56,400 56,000 9
South Africa 40,000 44,000 42,000 51,200 55,000 56,700 50,000 10
volume of 168,500
Madagascar 15,000 5,900 22,000 29,200 40,300 45,500 48,000 11 metric tons.
Colombia 72,000 76,000 80,000 75,000 81,000 40,400 36,800 12
United States - - - - 4,300 27,200 25,000 13
Other countries 99,000 103,000 120,000 377,000 377,000 157,000 150,000 14
*Sources: US Geological Survey 2016

Analysis of export volume and value
• Comparison of nickel exports to China to the

rest of the world.
• Differences in export values between
Indonesia and China.
DATA OF INDONESIA NICKEL EXPORT TO CHINA
Sources: comtrade.un.org/data
DATA OF CHINA NICKEL IMPORT FROM INDONESIA
Sources: comtrade.un.org/data
Nickel Export >< Nickel Import Indonesia - China
• From January 12, 2014 to January 17, 2017, a ban on nickel exports in Indonesia was enacted.
• However, in that period still recorded export from Indonesia to China and China import from Indonesia
• There is a difference in Indonesia's export data to China and China's imports from Indonesia, as indicated by the table.
Source: comtrade.un.org/data
China is the largest export destination country of Indonesian nickel.
Year Trade Flow Reporter Partner Commodity Code Commodity Netweight (kg) Trade Value (US$)
2014 Export Indonesia World 260400 Nickel ores and concentrates 4.160.120.660 $ 85.913.010,00
2013 Export Indonesia World 260400 Nickel ores and concentrates 64.802.857.120 $ 1.685.247.617,00
2012 Export Indonesia World 260400 Nickel ores and concentrates 48.449.392.135 $ 1.489.084.347,00
2011 Export Indonesia World 260400 Nickel ores & concentrates 40.792.164.833 $ 1.428.040.111,00
2010 Export Indonesia World 260400 Nickel ores & concentrates 17.566.047.388 $ 532.446.129,00
2014 Export Indonesia China 260400 Nickel ores and concentrates 3.989.893.880 $ 82.208.881,00
2013 Export Indonesia China 260400 Nickel ores and concentrates 58.604.651.822 $ 1.447.415.806,00
2011 Export Indonesia China 260400 Nickel ores & concentrates 36.142.280.593 $ 1.162.069.111,00
2010 Export Indonesia China 260400 Nickel ores & concentrates 14.346.464.168 $ 348.397.438,00
• Indonesia's total volume to the World = 205.826.709.546 kg

• Indonesia's total volume to China = 175.810.047.126 kg
• In the period of 2007-2014, it reached 85% of the total volume exported Indonesia to the World.
Sources: UN COMTRADE, Central Bureau of Statistic

The difference between import and export value reached US $ 7.2 billion.
Year Trade Flow Reporter Partner Commodity Code Commodity Netweight (kg) Trade Value (US$)
2014 Import China Indonesia 260400 Nickel ores and concentrates 10.641.407.476 $ 759.610.799,00
2013 Import China Indonesia 260400 Nickel ores and concentrates 41.051.548.153 $ 2.999.735.460,00
2012 Import China Indonesia 260400 Nickel ores and concentrates 33.632.156.548 $ 2.962.340.101,00
2011 Import China Indonesia 260400 Nickel ores & concentrates 25.583.590.190 $ 2.715.262.024,00
2010 Import China Indonesia 260400 Nickel ores & concentrates 12.194.518.986 $ 802.972.784,00
2011 Export Indonesia China 260400 Nickel ores & concentrates 36.142.280.593 $ 1.162.069.111,00
2010 Export Indonesia China 260400 Nickel ores & concentrates 14.346.464.168 $ 348.397.438,00
On Periode 2007-2014,
China imports from Indonesia = $12.180.560.807
Indonesia exports to China = $ 4.951.943.449
The difference between the value of China’s imports and Indonesia’s exports = $ 7.228.617.358
Sources: UN COMTRADE, Central Bureau of Statistic
Attachment
The volume and value of nickel ore export to various destination countries.
Sources : Central Bureau of Statistic Data, 2002-2014.

Data BPS Data, 2014 only available for January.
IMPACT OF ILLEGAL TRADING
The country suffered enormous losses due to illegal nickel

trade, such losses among others:
•
1. State foreign exchange earnings (DHE) decreases.
2. Receipts from corporate taxes (Income Tax 25) decreased.
3. State revenue from royalty (PNBP) decreases.
4. The price of nickel was destroyed by the control of the cartel.
5. The program "sustainable mining practices" is difficult to achieve.
6. The loss of Indonesian sovereignty as a Nickel Ore exporter country

in the determination of world nickel price (price reference).
NICKEL ORE PRODUCTION COST
TOTAL NICKEL ORE PRODUCTION COST IS USD 16.57/MT

LOCAL & EXPORT PRODUCTION COST
IUP OP / OPK - IUI
LOCAL & EXPORT PRODUCTION COST
IUP / IUI
COMPARISON OF NICKEL ORE
SALES PRICE
NICKEL LOCAL Export HPM

GRADE (FOB Barge) (FOB Vessel) (FOB)
(LME 13.500)
1.7 % USD 15.00 / wmt USD 35.00 / wmt USD 29.62 / wmt
1.8 % USD 18.00 / wmt - USD 32.85 / wmt
1.9 % USD 21.00 / wmt - USD 36.78 / WMT
Remark :
1. Local sales price does not match HPM
2. HPM can be used as a LOCAL reference price.
CONCLUSION
The impact of low sales prices in the country:
1. Many companies hold IUPOP and OPK try to get EXPORT QUOTA, because the
export price is higher with low grade.
2. Export sales with low grade < 1.7%
3. The local price is the same when LME 9000 and LME 14.000, not in accordance
to HPM
4. Local demands with grade > 1.8%
5. It’s hard to achieve SUSTAINABLE MINING PRACTICE
6. Miner bear many obligations and taxes.
7. Bad environment impact because no reclamation post mining.
8. No reasonable profit for miners.
9. One of the local smelter factory which operating now earn 10 billions Yuan / 1,5
billion USD / 20 Trillions Rupiah in 2017 (net profit 2017) **sources from China
Nickel conference Data.
10. If 3 of the biggest local smelter require +/- 20 millions wmt/year, then with the
price usd 20/wmt x 20 millions wmt, the profit of those smelter are USD 400
millions (+/-5 trillions) / year
CONCLUSION
The impact of export sales:
11. Many companies earn QUOTA EXPORTS but the source of the nickel ore is not
from the mine it own and use in applying the export quotas and or using
smelter company to buy nickel ore at low price but not for use in smelter but for
export.
12. There are indication that the ore exported is not according to the regulations.
13. The pricing of the Nickel ore exported are manipulated by transfer pricing,
under invoicing.
14. Nickel ore tonnage volume is not suitable due to manipulation of shipping
manifest.
15. Disparity of FOB Nickel selling price of FOB to local compare to FOB for export =
USD 20.00 / wmt
16. Smelter does not pay royalty, but miner must pay royalty.
17. Others operation and owning IUP for good mining practice cost are not stated in
IUI
18. The failure of administrative sanctions in accordance to PERMEN NO. 7 Tahun
2017
SUGGESTION & INPUTS
1. The Government involved in determination of domestic sales price.
2. Fair and transparent transactions for sellers and buyers.
3. Price is adjusted to applicable international market.
4. Reduction of some obligation (Tax / PNBP / Royalty) for miners
5. Domestic buyers are limited to the use nickel nickel grade lower than > 1.7%
6. Suggest to have Nickel Exchange (like Tin Exchange) for trading transaction.
7. So that the Nickel Quota given by the Government more focused on improving
the quality of local nickel miners to be national smelter businessman, not to the
Giant Smelter (Foreign) companies which already operating a long time and do
not need government assistance.
8. HPM issued by the government every month can be used as a reference price.
9. So that nickel commodities to be like coal and other mineral commodities where
government is present to set the pricing.
APL TOWER LT. 36, PODOMORO CITY
JL. Letjen S. Parman Kav. 28 Jakarta
Telp. 021-29860770, Fax. 02129860771
Hp. 081398610588, 087877308588
Email. [email protected]
www.apni.id

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1.

2. Distribution of Nickel Potential in Indonesia

3. Distribution of IUP Nickel in Indonesia

2 SOUTH SULAWESI 2 31.600.000

3 CENTRAL SULAWESI 439 765.252.000

4 NORTH MALUKU 300 797.202.611

6 WEST PAPUA 2 125.000.000

TOTAL 1.278 2.985.082.836

Volume (metric ton) nickel content

*Sources: US Geological Survey 2016

• Comparison of nickel exports to China to the

• Indonesia's total volume to the World = 205.826.709.546 kg

Sources: UN COMTRADE, Central Bureau of Statistic

Sources : Central Bureau of Statistic Data, 2002-2014.

The country suffered enormous losses due to illegal nickel

2. Receipts from corporate taxes (Income Tax 25) decreased.

3. State revenue from royalty (PNBP) decreases.

4. The price of nickel was destroyed by the control of the cartel.

5. The program "sustainable mining practices" is difficult to achieve.

6. The loss of Indonesian sovereignty as a Nickel Ore exporter country

TOTAL NICKEL ORE PRODUCTION COST IS USD 16.57/MT

NICKEL LOCAL Export HPM

1.8 % USD 18.00 / wmt - USD 32.85 / wmt

1.9 % USD 21.00 / wmt - USD 36.78 / WMT

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