At least one Indonesian exporter, nickel producer PT Aneka Tambang (Antam), has begun offering material for export again after the government confirmed a flat-rate 20% tax on minerals exports.
Updated tax regulations have been issued, bringing exporters one step closer to being able to ship again after a ban was imposed from May 6.
“The 20% tax rate is not secret anymore, so there is no surprise there,” Alwin Syah Loebis, Antam's president director said. Antam is Indonesia's second-biggest nickel miner.
“But with the official announcement of tax regulations out, producers can expect to resume exports soon,” he added.
Antam's ships are ready to leave for export destinations once it gets the exports documents, Loebis said.
The 20% tax will apply to exports of copper, lead, nickel, gold, silver, zinc, chromium, zircon, bauxite, manganese, cobalt, molybdenum, platinum, titanium, antimony, and iron ore.
Market attention will now turn to how companies will set prices after the resumption of trade: in particular, will producers try to pass on the 20% tax to their customers, or accept tighter margins themselves.
Antam has been negotiating with its buyers to share the 20% tax burden, Loebis said.
“Our buyers are very understanding. They know that none of the additional 20% tax goes into Antam’s pocket,” he said. “Some buyers have actually agreed to bear all of the tax costs, while some others are willing to share part of the costs.”
Antam, the second largest nickel producer in Indonesia, exports its high grade nickel ores to Japan and low grade nickel ores to China.
Chinese buyers unwilling to share tax burden
But Chinese buyers have said they are not willing to pay higher prices for Antam's ores.
Antam has started offering nickel ore at 1.8% nickel grade at $73-75 cif Chinese ports this week, up $6 from its last offers before the export ban.
Freight charges to China are about $18 per tonne, market participants said.
"This price is obviously too high and no one has accepted it," a source at a Chinese stainless steel mill said.
"Do you think buyers will accept the higher prices? Of course not, demand [in China] is weak," an official at a trading company in China said.
"Miners [such as Antam] have made a lot of money in the past several years. They are able to afford the taxes," another official at a trading company in China said.
Not all Indonesian miners are ready to raise prices either.
“If we raise prices, buyers will get bauxite supply from other parts of the world,” a bauxite ore exporter based in Riau said.
“We don’t know yet how the taxes will be calculated. But my guess is that people will stop mining production of low grade bauxite ores, and will all go for high grade ores,” he said.
Indonesian companies also have to pass a three-stage approvals process
before they can legally export material.