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Indonesia’s nickel ore export ban, domestic processing requirements found violating WTO rules

The World Trade Organization has ruled that Indonesia’s export ban and domestic processing requirement on nickel ore violates WTO rules, according to a report released Nov. 30.

The WTO’s Dispute Settlement Body established a panel in February 2021 to examine whether Indonesia’s imposition of the two measures prevent the export of nickel ore from Indonesia, as alleged by the EU, which challenged the export ban on nickel ore, as well as another measure that requires that all nickel ore be processed domestically in Indonesia.

The EU had gone to the WTO in November 2019 after initially reaching out to Indonesia to try to resolve the dispute. It then requested the establishment of a panel in January 2021 after these did not lead to a resolution.
The EU said in a Nov. 30 statement that it welcomed the WTO decision, which upheld all EU claims against Indonesia.

“Indonesia has had long-standing and varying restrictions affecting nickel ore exports,” the EU said, adding that a full ban on nickel ore exports had been in place since January 2020, while domestic processing requirements on nickel ore had forced businesses to process or purify the raw materials in Indonesia before export.

“These measures unduly and illegally restrict EU access to raw materials needed for stainless steel production and distort world market prices of ores,” the EU said.

The London Metal Exchange three-months nickel price closed at $26,861/mt Nov. 29, up 27.1% since the start of 2022.

The WTO recommended in its report that Indonesia bring its measures into conformity with its obligations under the General Agreement on Tariffs and Trade, or GATT 1994, which aims to promote international trade by reducing tariffs and other trade barriers and eliminating discrimination.

According to the report, the WTO panel found that Indonesia’s export ban and domestic processing requirement on nickel ore used in stainless steel production was inconsistent with the WTO’s prohibition of export prohibitions and restrictions contained in Article XI:1 of GATT 1994.

The panel also confirmed that the Indonesian measures did not fall under the exemption for prohibitions or restrictions temporarily applied to prevent or relieve critical shortages of products essential to Indonesia, as contained in Article XI:2(a) of the GATT 1994.

It also ruled that the measures were not justified by the exception for measures necessary to secure compliance with relevant laws and regulations in Article XX(d) of the GATT 1994.

Prices of nickel sulfate, which is processed from nickel ore to be used in the battery market, have been strong in 2022. Platts, part of S&P Global Commodity Insights, assessed spot battery-grade nickel sulfate with minimum 22% nickel content and maximum 100 ppb magnetic material at Yuan 39,800/mt ($5,546/mt) DDP China Nov. 30, up 17.4% since the start of the year.
Source: Platts

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