6-7-2023 (JAKARTA) Indonesian authorities have launched an investigation into alleged illegal shipments of nickel ore to China, totaling 14.5 trillion rupiah (S$1.3 billion) over a span of 2.5 years from early 2020.
The Corruption Eradication Commission (KPK) recently disclosed that approximately 5.3 million tonnes of nickel ore were unlawfully sent from Indonesia to China between January 2020 and June 2022. This illicit activity is estimated to have resulted in the loss of 575 billion rupiah (S$51.8 million) in royalties and export taxes for the Indonesian government.
Muhammad Wafid, the acting director-general for mineral and coal mining at the Energy and Mineral Resources Ministry, stated that his office is working in conjunction with relevant institutions, including Indonesia’s embassy in Beijing, to verify the details of these shipments. “We are verifying everything as the (nickel ore) export is banned,” he was quoted as saying.
The irregularities in the export values of nickel, as reported by Statistics Indonesia and China’s General Administration of Customs, initially drew the attention of the anti-graft body. Although the origin of the nickel ore has not been explicitly disclosed, it is believed to have originated from nickel mines in Sulawesi or North Maluku, Indonesia’s largest nickel-producing regions, according to Dian Patria, a supervisory official at the KPK.
The export ban on nickel ore, implemented since January 2020, prohibits the export of unprocessed nickel, allowing only processed nickel such as ferronickel and nickel pig iron to be exported. The ban aims to encourage investment in processing facilities and smelters within Indonesia, the world’s leading producer of nickel, a crucial component in electric vehicle (EV) batteries, while strengthening the domestic industry.
Nirwala Dwi Heryanto, spokesperson for the Finance Ministry’s customs and excise office, confirmed the findings with their Chinese counterparts and obtained a list of exporters involved in these illicit shipments. The results will be shared with the KPK for further investigation.
Irwandy Arif, special staffer to the energy and mineral resources minister, stated that since the ban was implemented, the ministry has not issued any export recommendations to the Trade Ministry, which holds the authority to issue export permits. “There has been no plan to export nickel ore in the proposed annual budget approved since Jan 1, 2020,” he clarified.
Business groups and experts have called for intensified efforts by the government to resolve the case and impose strict penalties on those responsible for these illegal shipments, aiming to deter such unlawful activities.
Meidy Katrin Lengkey, secretary general of the Indonesian Nickel Mining Association, suggested that the nickel ore might have been falsely declared as processed nickel, such as nickel pig iron, to facilitate the shipments to different ports in China. She stressed the need for tighter supervision by export authorities, including the Transport Ministry and the Customs and Excise office, to prevent such breaches.
Yusri Usman, executive director of the think-tank Centre of Energy and Resources Indonesia, echoed Meidy’s concerns and proposed the establishment of an integrated digital nickel information platform. This platform would enable various government institutions to access data on nickel output from mining and processing companies, as well as domestic sales and exports, facilitating more effective supervision and discouraging illegal exports.
Indonesia possesses approximately 21 million tonnes of nickel reserves, accounting for nearly a quarter of the world’s total, according to the US Geological Survey.
While the International Monetary Fund (IMF) recently recommended that Indonesia lift its nickel export ban, citing limited job creation and increased corruption, Indonesian officials have defended the policy. In recent years, the country has attracted substantial foreign investment from companies seeking to produce electric vehicles and batteries domestically.
