Shandong Xinqiujing Metal Material Co., Ltd. share Indonesia "ban aluminum" can achieve the real purpose?
发布时间：
2023-05-30 15:20
According to Reuters, Indonesian President Joko recently announced that Indonesia will ban bauxite exports in June this year. Bauxite is an important raw material for many industrial products, including aluminum, cement and various chemicals. The purpose of the ban is to ensure that bauxite mined in Indonesia is used as an input for domestic industrial activities and not exported to other countries where it adds value.
The move is in line with Indonesia's increasingly aggressive use of the export ban to pursue domestic economic goals. Last year, we saw governments temporarily ban coal and palm oil exports to avoid domestic shortages amid high global commodity prices. Furthermore, the Chinese government has been relatively successful in using the ban on exports of unprocessed nickel ore to accelerate investment in higher value-added downstream activities such as smelting.
The bauxite export ban is apparently modeled on the nickel export ban. Indonesia has large state-owned enterprises and is a major player in the domestic aluminum and cement industries. There is no doubt that the purpose of banning bauxite exports is to force more investment into higher value-added industrial activities that can be carried out by these and other domestic players.
But there are reasons to question whether Indonesia can treat bauxite the same way it treats nickel and expect a similar outcome. Indonesia has much less market presence in bauxite. According to the United States Geological Survey (USGS), as of 2021, Indonesia's bauxite reserves accounted for only 3.75% of the world's total, and its production accounted for only 4.6% of the world's total. By comparison, Indonesia produced about 30% of the world's nickel in 2020. The USGS also noted that "except for bauxite, the United States and most other major aluminum producing countries have essentially inexhaustible sub-economic aluminum resources."
This appears to limit Indonesia's ability to use the bauxite export ban to attract investment in domestic industrial activities such as aluminum smelting. First, bauxite is more easily substituted, at least according to the USGS. What's more, Indonesia's ability to attract investment by unilaterally banning bauxite exports is limited given that countries such as Australia and China account for a larger share of global bauxite production. Buyers of Indonesian bauxite are not forced to invest in Indonesian processing facilities simply by turning to Australia or other large global suppliers.
The government has been signaling that they want to use the export ban more aggressively in the coming years in order to turn controls on raw commodities into higher value-added economic activity. It is an understandable impulse, and this economic nationalism is on the rise across the region and the world. But an export ban should be based on some larger economic logic or strategic thinking.
The logic behind Indonesia's ban on exports of coal, palm oil and nickel ore is very clear. Since Indonesia controls a large share of global production of these commodities, Indonesia can demand certain things, such as investing in higher value-added domestic manufacturing or industrial activities. In other words, the state has leverage to intervene in the market and try to force the market to serve the national interest. But with less than 5 percent of global bauxite production, it is less clear that governments have the same leverage and can bend markets to their will in the same way.Shandong Xin Moment De share Indonesia "ban aluminum" can achieve the real purpose?
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