Indonesia’s president said Thursday that his government is considering imposing a tax on nickel exports this year to increase revenue and promote higher-value local manufacturing.
“That’s what we want also with bauxite, copper, tin, crude palm oil, and others,” Widodo was quoted as saying by the news outlet. “We are not being closed, we are being open indeed.”
Indonesia, once a major nickel ore exporter, banned exports of unprocessed nickel in 2020 to attract investment into its smelting industry. But most development has gone into producing nickel pig iron (NPI) and ferronickel, which have relatively low nickel content.
Widodo did not specify when or how much nickel exports will be taxed. But a senior government official said on Aug. 1 that the government planned to issue a nickel export tax policy in the third quarter of the year.
Septian Hario Seto, the deputy coordinating minister for Maritime and Investment Affairs, said that Indonesia will tax NPI and ferronickel based on the price of nickel price and coal, which is used in production as an energy source.
Downstream of Raw Materials
The government is also looking to downstream other raw materials. Widodo said in his national address on Tuesday that increasing downstreaming would help to shield Indonesia from exchange rate fluctuations.“In 2014, [the steel export] was only around 16 trillion rupiahs [$1.1 billion], but in 2021 it increased to 306 trillion rupiahs [$29.6 billion] by the end of this year. And that was only from nickel ore [downstreaming],” he said.
“After nickel, the government will also encourage downstream industry for bauxite, copper, and tin,” the president added, according to a local news agency.
Widodo also called for sustainable and low-emission industrial development to support the global green economy ecosystem.
The government is keen to take advantage of Indonesia’s large deposits of nickel to eventually produce batteries for electric vehicles (EVs) and also to assemble EVs at home.
“Clean energy from solar heat, geothermal, wind, ocean waves, and bioenergy will attract industrialization, producing low-emission products,” he remarked.
Indonesia had secured investment deals from South Korean investors such as LG and Hyundai to produce batteries and EVs. Widodo is also keen to persuade Tesla to invest in the country and met with its founder Elon Musk during a recent visit to the United States.