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No ‘Crushing Impact’ on Prices From Indonesia’s Metals Tax

Indonesia's decision to tax the export of metal ores and ban the shipment of raw minerals unless miners submit plans to build smelters will only have a limited impact on commodity markets, several experts told CNBC.

Open cast mining for iron ore.
Tim Graham | The Image Bank | Getty Images
Open cast mining for iron ore.

David Land, Head of Analysis and Education at CMC Markets told CNBC's “Cash Flow” on Friday that the regulation would reduce the supply of these commodities and raise their prices, but also added that Indonesia "is one country, so it is not necessarily a crushing impact by any stretch."

Jonathan Barratt, Founder of the Barratt's Bulletin, told CNBC Asia’s “Squawk Box” that he expects commodity prices "to have a knee-jerk reaction to the top side in the short-term, but in the longer-term Indonesia will turn around and say we need it for our own economy to rebuild it and make it stronger."

With effect from Sunday, Jakarta will impose an average export tax of 20 percent on 14 types of metal ores including copper, gold and nickel.

There are concerns that these regulations would make Indonesia less attractive to foreign investors, but Wellian Wiranto, Investment Strategist at Barclays told CNBC that “Indonesia continues to be on a consumption boom, and we see that as being sustainable in the medium term."