Indonesia's Bauxite Has Higher Monetary Value Than Nickel

According to the Central Bureau of Statistics (BPS), Indonesia's bauxite resources had a monetary value of approximately Rp212.1 trillion in 2021, higher than nickel, which was only Rp62.7 trillion.

However, the monetary value of bauxite is lower than copper, as detailed in the graph.

This monetary value is not the same as the trade value. BPS calculates the monetary value of mineral resources based on the System of Environmental-Economic Accounting (SEEA), an international guideline for measuring economic and environmental interactions.

Within the SEEA framework, the monetary value is calculated using the Net Present Value (NPV) method, which involves many indicators, such as the rate of return on environmental assets, the estimated economic value of future assets, the lifespan or availability of resources, and the discounted value of income generated from environmental assets.

"The valuation of mineral assets in monetary units is done by setting a discount rate using government bond rate data from the Ministry of Finance," said BPS in its report.

Although the monetary value of bauxite is not the highest, the government plans to ban the export of this commodity starting next year.

"Starting June 2023, the government will ban the export of bauxite ore and encourage the processing and refining of bauxite domestically," said Jokowi at the Merdeka Palace, Jakarta, as reported by Antara, Wednesday (21/12/2022).

Jokowi stated that this export ban aims to achieve natural resource sovereignty, create jobs, increase foreign exchange earnings, and promote equitable economic growth.

"The export of raw materials will continue to be reduced, and the downstreaming of industries based on natural resources domestically will continue to be increased," said Jokowi.

Previously, the government also banned nickel ore exports since January 1, 2020. However, this policy was challenged by the European Union to the World Trade Organization (WTO).

After a lengthy trial process, the WTO granted the European Union's lawsuit in October 2022. Indonesia 'lost' in the trial because it was deemed to have violated international free trade agreements, including Article XI:1 of the General Agreement on Tariffs and Trades (GATT) 1994.

This GATT article states that WTO member countries may only limit duties, taxes, or other levies, but are prohibited from imposing quota restrictions or export and import licensing.