Indonesia's Nickel Tariff Affects Japan

Industry sources said the mining companies insist that refining companies shoulder the burden. Japanese companies have refused. For example, Sumitomo Metal Mining Co. has insisted that it does not have an obligation to pay.

But an industry source said, "Considering the volume of imports and the power balance, it will be difficult to avoid shouldering any burden at all."

Masao Yamada, chairman of the Japan Mining Industry Association and president of Dowa Holdings Co., said at a regular press conference in May, "If refining companies shoulder the payments, it will mean a very high rise in our costs."

If Japanese companies build refining plants in Indonesia to avoid the export tariff, it is essential to also have large-scale electric power plants and port facilities.

An industry source said, "It's impossible to build such large facilities in a year or two."

Because the percentage of nickel content in ore varies depending on its origin, importing ore from other countries is seen to be difficult.

An official of Nippon Yakin Kogyo Co. said, "Assuming the export ban does take effect in the future, we need to consider how to cope with that now."

The World Trade Organization does not have any specific rules to prohibit export tariffs.

But the Economy, Trade and Industry Ministry said the negative impact will be serious. The ministry has asked the Indonesian government to reconsider the decision, including withdrawal of the planned export ban in 2014.

An official of a nonferrous metal company said, "We fear a second and a third Indonesia will appear."