Export Restrictions on Minerals and Metals: Indonesia’s Export Ban of Nickel

This is the second paper in a series of working papers that examines the effects of export restrictions placed on minerals and metals. This paper focuses on an export ban that Indonesia placed on nickel ores and concentrates initially in 2014 and implemented again in 2020 following a brief lapse in enforcement. Indonesia, a leading global source of raw nickel products, sought to strengthen and expand its downstream nickel production capacity partially through the use of the export ban. The downstream nickel products that are made in Indonesia feed into critical applications such as stainless steel, used in construction and industrial purposes, and lithium-ion batteries for electric vehicles. The potential impact of the export ban is examined using datasets that illustrate a shift in the composition of Indonesia’s exports to higher-value nickel products, increases in downstream production, and more foreign investment in Indonesia following the ban. Finally, the paper also explores areas where the increases in downstream production capacity and foreign investment intersect with a variety of issues and challenges related to this growth. The appendix provides a theoretical approach to examine the effects of Indonesia’s nickel export ban on the supply chain using partial equilibrium modeling.