Asian Intelligence 4 | <strong>ASIA</strong> <strong>Miner</strong> | July/August 2012
AN interesting recent development for the sluggish nickel industry has come in the form of the Indonesian gover nment’s new tax on unprocessed mineral ore exports, which may boost prices and increase pressure on supply. <strong>The</strong> new tax on the export of 14 types of unprocessed minerals came into ef fect on May 6 and has been intr oduced in a bid to boost value-added products. <strong>The</strong> minerals affected are gold, silver, platinum, copper, lead, nickel, zinc, ir on ore and sand iron, manganese, chromium, molybdenum, bauxite and antimony. <strong>The</strong>re has been mixed response within Indonesia and further afield with concern expressed that it will affect miners’ revenue and significantly affect profit margins. <strong>The</strong>re have certainly been mixed messages about the impact on nickel with some companies to benefit and others to be impacted negatively. <strong>The</strong> government has made exceptions for miners that alr eady have or plan to New Indonesian tax may benefit nickel build smelters. <strong>The</strong>y will be taxed at an average of 20% on ore exports. Companies like Vale Indonesia, the country’s biggest nickel miner, won’t be affected because they process ore into refined products. But other companies will be impacted, including state-controlled Antam, which obtains about 30% of its r evenue from ore shipments. To process raw nickel, Antam plans to build a $1.6 billion ferronickel smelter in East Halmahera. Some companies may end up holding back ore shipments if the new levy makes mining unprofitable and might focus on building smelters instead. This could, in turn, lift nickel prices and put pressure on supply. Kim Eng Securities in Jakarta said in a note to clients that the imposition of an export duty on mineral ores would curb cheap nickel ore supply and, in turn, stoke a nickel price rally. China International Capital Corp also for ecasts a boost in nickel prices but says large EPA recommends approval for Wiluna THE Western Australian Environmental Protection Authority (EPA) has r ecommended approval for Toro Energy’s Wiluna Uranium Project. <strong>The</strong> EPA has presented a report and recommendations to Western Australia’s Minister for Environment. Toro is awaiting the Minister’s decision following review of any appeals that are raised. <strong>The</strong> project was referred for assessment to the Western Australian and Federal gover nments in October 2009. An Environmental Review and Management Program was exhibited for public consultation over 14 weeks from July 2011 with 48 submissions made to the EP A. Toro has provided comprehensive responses to all submissions to enable the EPA to finalize its assessment. A Federal Gover nment decision on its assessment is anticipated after the Western Australian process is finalized. Toro’s Board will then target a final investment decision by the end of 2012, subject to final market and economic considerations. “<strong>The</strong> EPA recommendation is an important milestone for Toro and for the W estern Australian uranium industry,” Toro’s managing director Greg Hall says. “While the Toro team members have significant experience within other uranium and mining operations, Wiluna is Toro’s first project and the first uranium project to receive a positive EPA recommendation in Western Australia since the change of government in 2008. Toro is confident that its extensive technical and environmental study work and the rigorous assessment undertaken by the EPA will ensure a safe and sustainable mining operation. This project is one of the few in the world potentially capable of commencing production in the critical 2014/15 period when the nuclear industry will be seeking additional supplies.” Toro’s Wiluna project is about 520km north of Kalgoorlie in central Western Australia. It comprises uranium in the Centipede and Lake Way deposits. Asian Intelligence By <strong>The</strong> <strong>ASIA</strong> <strong>Miner</strong> editor, John Miller stockpiles in China will limit short-term impacts of any supply shortfall. It says the tax is expected to add 7.5% to average production costs of nickel pig ir on in China, improving incentives to use refined nickel at current price levels. About 60% of China’ s pig iron output, which accounts for 60% of the nation’s nickel production, relied on Indonesian laterite ores last year. In a research note, analysts at Citi said the outlook for nickel was ‘significantly mor e positive’ thanks to Indonesia’s moves. “Expectations of reductions in exports range from 20% per cent to 75% by the fourth quarter of 2012. <strong>The</strong> Philippines might also pick up any slack in shipments caused by the ban. A Mines and Geosciences Bureau official said recently that nickel-ore production and exports from the Philippines may rise this year, benefiting from Indonesia’s ban. Australia is another country that could benefit. Lynas has LAMP appeal dismissed AN appeal lodged under the Atomic Energy Licensing Act in relation to the decision of the Malaysian Atomic Energy Licensing Board to approve the issuance of a temporary operating licence (TOL) for the Lynas Advanced Materials Plant (LAMP), has been dismissed. In dismissing the appeal, the Minister of Innovation, Science and Technology, YB Dato’ Seri Panglima Dr Maximus Johnity Ongkil affirmed the February 1, 2012 decision of the Boar d to appr ove the issuance of the TOL. L ynas has r eadily available solutions to satisfy the new conditions announced by the Minister . <strong>The</strong> next step will be the tabling and debate of the Parliamentary Select Committee’s Report. Lynas looks forward to completion of the regulatory and political pr ocesses in Malaysia as soon as possible. “<strong>The</strong> decision by the Minister is the latest in a long line of rulings and approvals where Lynas has been assessed and judged to have complied with Malaysian and international regulatory standards,” says Lynas executive chairman Nicholas Curtis. July/August 2012 | <strong>ASIA</strong> <strong>Miner</strong> | 5
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