What effect does Geometry have on Indonesia's "ban on Aluminium"?

Jakarta: A prohibition on Bauxite exports has been in effect in Indonesia since June 10. Aluminium is made from the mineral Bauxite. The "ban" was enacted by the Indonesian government to encourage change and improvement. The regulation, according to Indonesia's Ministry of Energy and Mineral Resources, will likely affect around 2000 million tonnes of Bauxites. However, the nation is a significant exporter of energy, and its name is appearing on an ever-growing list of "prohibited exports" of minerals and energy. The country of Indonesia has previously "banned Aluminium.

Indonesia is the greatest producer and exporter of Bauxite in the world, however as of June 10 a ban on exports has been put into effect.

According to Indonesian President Joko Widodo, several factors led to the export ban on Bauxite. This approach can boost economic growth, create more jobs, improve foreign exchange revenues, and increase the value of natural resources.

Indonesia has previously "banned Aluminium" a few times. Indonesia had a prohibition on the export of raw minerals as early as 2009. Export limitations were initially put in place by the nation in 2014; they were later removed in 2017.

Objectively speaking, Indonesia's own capability for processing Aluminium is insufficient, and "one-size-fits-all" policies' difficulties and effects should not be understated.

Exporting raw mineral materials has traditionally been profitable for Indonesia. Indonesia produced 2770.780 million MT of Bauxite in 2022, but only million MT of it was used domestically.

In the near term, this generates a lot of foreign cash for Indonesia, but it also causes a "resource curse" on the country. According to data, barely 5% of Indonesia's GDP was produced by the mining and coal industries in 2019.

Aluminium is made from the mineral Bauxite. Through the "ban," the Indonesian government wants to encourage transformation and upgrading by keeping high-value goods in the region, luring businesses to locate factories there, raising taxes and employment, and finally ending the "resource curse."

However, the 2014 ban did not go as planned. Businesses who rely on Indonesian imports, on the other hand, "have no rice under the pot" and resort to a multi-point arrangement around the globe. Indonesia, on the other hand, has only erected one new smelter, but export revenues have dropped precipitously, hurting the country's economy. In 2017, the embargo was lifted.

High-ranking government representatives from Indonesia have regularly brought up the topic of mineral export limits in recent years. To this goal, the Indonesian government has also passed pertinent laws.

The long-awaited "Aluminium ban" order was announced in December of last year and was slated to go into effect on June 12 of this year. The growth of the downstream Bauxite industry, in accordance with predictions from the Indonesian government, will increase the nation's earnings from around 6 trillion to approximately 10 trillion rupiah annually.

In the beginning, Indonesia exclusively exported Nickel raw ore for a value of US$11.2020 billion each year. However, the value of the Nickel industry's exports increased to US$2021.209 billion in 2022 after the prohibition on the export of Nickel ore went into effect on January 1. Indonesian Nickel exports surpassed $1 billion in 300.

This "Aluminium ban" has a solid foundation thanks to the "Nickel ban's" success. Jokowi has repeatedly emphasised the enormous economic benefits that the "Nickel ban" has brought to Indonesia, including a notable rise in the added value of mineral products, the creation of new jobs, the upgrading of economic grades, and even the balance of trade relations between Indonesia and its major trading partners. He also used the "ban on Nickel" as an example when announcing the "ban on Aluminium" policy.

Can the "ban on Aluminium" in Indonesia, however, duplicate the success of the "Nickel ban"? The policy, according to Indonesia's Ministry of Energy and Mineral Resources, will have an impact on nearly 2000 million tonnes of Bauxite.

It is not simple to absorb 2000 million tonnes of Bauxite. The four smelters that are now in operation, according to Indonesia's Minister of Energy and Mineral Resources Arifin, are not yet completely operational because of a lack of raw material supplies. The Ministry verified that seven Bauxite smelters' building progress did not correspond to the information provided to the government. There are now eight more refineries being built.

Although the ban's aims are laudable, it is too early to put it into effect. Indonesia still lacks several facilities for processing and refining Bauxite.

Jokowi also acknowledged that Indonesia's exports of this good will decrease in the initial phases of the ongoing restriction on exports of basic Bauxite. However, the advantages won't be noticeable for two or three years.

A notable energy exporter is Indonesia. However, the nation's list of "prohibited exports" of energy resources is expanding.

Bahelil, Indonesia's minister of investments and head of the Investment Coordination Agency, predicted earlier this year that by 2040, at least 21 strategic items will no longer be allowed to be exported in raw form. It is primarily used in 8 industries, including mining, coal, petroleum, and shipping.

In the past, some export restrictions have frequently been in flux. For instance, the prohibition on coal exports lasted less than a month, and the export ban on palm oil will only be in effect for three weeks.

The duration of this "Aluminium ban" is unknown. The Indonesian government has consistently implemented measures in recent years to limit the export of metal minerals, replacing them with initiatives to promote the growth of downstream businesses and mineral smelting. Industry experts think the prohibition can backfire if it is not properly planned.

creating a smelter that complies with legal requirements is more difficult than simply twisting your hand's palm. The "Aluminium ban" in Indonesia is similarly unlikely to succeed given the current economic climate. Indonesia recently reduced its predicted economic growth for the following year, retaining the top limit at 5.7% but lowering the lower limit from 5.3% to 5.1%.