Japan May Take Indonesia to WTO Over Ban on Ore Shipments

By webadmin on 05:09 pm Jun 12, 2012
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Japan, the world’s second-largest nickel user, called for Indonesia to remove restrictions on ore exports, saying it may complain to the World Trade Organization should compromise talks fail.    

“The country’s unilateral measures aren’t appropriate,” Takayuki Ueda, director general of the manufacturing industries bureau of Japan’s trade ministry, said yesterday in an interview in Tokyo.

Japan, which prefers to negotiate a solution, would consider complaining to the WTO should Indonesia proceed with a complete ban on exports as planned in 2014, he said.    

Indonesia’s curbs on some ore exports from May 6, combined with a 20 percent tax on the remainder, may increase costs for metal smelters in Japan, the world’s third-largest economy, Ueda said. The resource-poor nation also suffered when China’s restrictions on exports of rare earths sent prices soaring and complained to the WTO this year.    

“There are no other countries that would immediately replace Indonesia,” said Toshio Nakamura, the general manager of stainless raw materials at Mitsui & Co., Japan’s biggest trader of nickel. “We will consider how we will secure the raw material” under the new regulations for the mining industry.                         

Sinks, Tanks    

Prices of nickel, used to strengthen stainless steel in everything from kitchen sinks to aircraft fuel tanks, may rise about 18 percent to an average of $20,000 a metric ton in the fourth quarter, according to the median of 16 analyst estimates compiled by Bloomberg. The metal has fallen 9.1 percent this year, the worst performance of the six major metals traded on the London Metal Exchange. Exports from Indonesia, the world’s largest producer of nickel ore, may drop as much as 20 percent in the second half, Sukristiyawan, senior marketing manager at Aneka Tambang, the country’s second-largest producer, said in an interview last month.    

“For countries with mineral resources, it’s natural to ship value-added products rather than raw materials to develop their own industries,” said Kotaro Shimizu, chief analyst at Mitsubishi UFJ Research and Consulting Co.’s environmental policy consulting department. “To secure stable supplies, it’s important for Japan to provide technology and training through government-to-government negotiations.”                         

Regular Talks    

Ueda is scheduled to meet Rizal Affandi Lukman, a deputy to the Coordinating Minister for Economic Affairs for International Trade and Economic Cooperation, in the “not-so-distant” future, as the two countries agreed to hold talks regularly, he said. The country is ready to offer support to Indonesia, seeking to nurture domestic industries by adding value to unprocessed ores and minerals.    

“Fighting against Indonesia is not Japan’s objective — Japan has long-term relationship with Indonesia and business ties are also close,” Ueda said. “We’d like to seek solutions through dialogue.”    

Japan imported 3.65 million tons of nickel ore in 2011, according to finance ministry data. Indonesia supplied 1.95 million tons, or 53 percent, followed by New Caledonia with 27 percent and the Philippines with 19 percent, the data showed.    

Mitsubishi Corp., Japan’s biggest trading company, and Pacific Metals Co., a ferronickel producer, have joined France’s Eramet SA on a project to develop the Weda Bay nickel reserves in Indonesia. 

The venture will produce an intermediate product for nickel, jointly with Jakarta-based Aneka Tambang, also known as Antam.    

On Feb. 16, Eramet Chief Executive Officer Patrick Buffet said the decision to develop the Weda Bay should be made in the first half of 2013.    

Japanese smelters, including Sumitomo Metal Mining Co., import ores to produce ferronickel and refined nickel.

Bloomberg