JAKARTA: Indonesian authorities are scrambling to clarify new mining rules that have rocked world commodity markets since they were announced on Thursday.
The country's energy and mineral resources minister said on Saturday that the amount of nickel ore and bauxite that could be exported by individual miners under the new rules would be "comparable" to their smelter capacity.
Ignasius Jonan was responding to comments by analysts that the lifting of export restrictions that had been in place since 2014 could flood global markets and wreck prices.
The regulation had been "misinterpreted", he told reporters on Saturday.
The announcements on Thursday by Jakarta rattled mining companies from the US to Japan and sent copper prices to their highest levels in a month.
Shares of nickel producers including Sumitomo Metal Mining Corp tumbled after Indonesia said it would allow some exports of nickel ore and bauxite, easing a ban on unprocessed ore shipments in place since 2014.
Shares of Freeport-McMoRan Inc, the US company that operates the world’s second-largest copper mine in Papua, fell after the government said it must change its operating terms. Prices of copper jumped in London as a result.
However, on Saturday Jonan said the ministry had received a letter from Freeport-McMoRan affirming its commitment to convert to a special mining permit, paving the way for it to continue exporting copper concentrate.
The new rules signal a major policy shift for Indonesia, which banned exports of raw, unprocessed ores in January 2014 as it sought to develop a domestic value-added processing industry and prevent its mineral wealth from disappearing overseas.
Indonesia produces 17 million tonnes of nickel ore per year, of which 10 million is low-grade, according to Jonan. The country's nickel smelting capacity is currently 16 million tonnes and may reach 18 million this year.
“It’s a negative for Australian producers,” said Sydney-based analyst Mathew Hodge of Morningstar. “The producers had rallied as China worked through stockpiles that it had built up before the ban was introduced."
Shares of the Perth-based nickel producer Western Areas jumped 37% last year, while Independence Group NL, which also produces gold, surged 70%.
The Indonesian government will now allow exports of excess nickel ore and bauxite by miners that are building processing plants in the country, said Bambang Gatot Ariyono, director-general of minerals and coal at the Energy and Mineral Resources Ministry.
Shipments will be permitted for a maximum of five years, he said. Smelters must source a minimum 30% of their supply domestically with low-grade bauxite and nickel ore.
Shipments will be linked to the progress of smelter projects, which must be completed within five years, Ariyono said.
Nickel prices on the London Metal Exchange tumbled 5.1% to the lowest since July on Thursday on the prospect of more supplies from Indonesia, before reversing losses to close 0.9% higher. Prices retreated 0.9% on Friday, however.
The Philippines overtook Indonesia as the world’s biggest producer of mined nickel following the export ban in 2014.
The Jakarta government also changed its rules on exports of semi-processed metals such as copper concentrate. Companies including Freeport and PT Amman Mineral Internasional, which last year bought the Indonesian copper and gold assets of Newmont Mining Corp, stopped shipments earlier in the week after regulations allowing exports lapsedon Jan 11.
They must now comply with a range of rules before concentrate exports can resume, including converting their contract of work into a special mining business licence and commit to building smelters.