Indonesian government plans to introduce an export tax on nickel pig iron

The Indonesian government plans to introduce an export tax on nickel pig iron (NPI) and ferronickel in the current quarter. This was said by a high-ranking official on Monday. The aim is to boost export earnings and encourage domestic production of higher-value products. Indonesia had already imposed an export ban on unprocessed nickel ore in 2020 to push for smelter construction in the country. Exact details on the design of the tax are not yet available. It is likely to be based on the prices of nickel and coal. The latter is included in production as an energy source. If an export tax is imposed, it will probably lead to a shortage of supply on the world market, as Indonesia is a major producer of NPI. This may be one reason why the nickel price has recently risen again to around USD 25,000 per tonne. The last time it was higher was at the end of June.

Source: Commerzbank Research, Photo: Fotolia