Japan May Take Indonesia To WTO Over Ban On Ore Shipments

Japan, the world’s second-largest nickel user, called for Indonesia to remove restrictions on ore exports, saying it may make a complaint 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 inTokyo. Should Indonesia proceed with a complete ban on exports as planned in 2014, Japan, which prefers to negotiate a solution, would consider complaining to the WTO, 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. (8031), Japan’s biggest trader of nickel. “We will consider how we will secure the raw material” under the new regulations for the mining industry.

Nickel prices may rise 17 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 exporter of nickel ore, may drop as much as 20 percent in the second half of the year, Sukristiyawan, the senior marketing manager of PT Aneka Tambang, the country’s second-largest producer, said in an interview last month.

Talks Scheduled

Japan 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 they agreed to hold talks regularly, Ueda 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.

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

June 12, 2012

Source: Bloomberg