Indonesia, among the world's biggest suppliers of natural resources, halted all mineral ore exports on Sunday to try to promote domestic processing, but threatening the country's nickel and bauxite industries worth more than $2 billion in annual shipments.
Halting exports of nickel ore could spark the biggest shake-up in the global nickel industry in more than five years, with Chinese stainless steel factories that make everything from kitchenware to cars and buildings set to hurt the most.
(Read more: Indonesia braces for impact of mineral export ban)
In one of his most far-reaching economic policy decisions since taking office nearly 10 years ago, President Susilo Bambang Yudhoyono approved the mineral ore export ban.
But in last minute changes at the weekend, he diluted it to allow exports of copper, iron ore, lead and zinc concentrates to continue, giving a reprieve to U.S. mining giants Freeport McMoRan Copper & Gold and Newmont Mining Corp, which together produce 97 percent of Indonesia's copper.
No such relief was offered to the nickel and bauxite industries, clouding the future for state-owned nickel miner PT Perusahaan Perseroan Aneka Tambang (Antam) and hundreds of other smaller miners.
"Minerals that have to be refined before export are bauxite, nickel, tin, chromium, gold and silver because they don't have intermediate products," Sukhyar, director general of coal and minerals at the ministry, told Reuters.
The long-planned ban hopes to eventually boost Indonesia's profits from its mineral wealth by forcing miners to process their ores before export. But officials fear a short-term cut in foreign revenue could widen the current account deficit, which has undermined investor confidence and battered the currency.
Indonesia is also the world's biggest exporter of refined tin and thermal coal and home to the fifth largest copper mine and top gold mine. Mineral shipments totaled $10.4 billion in 2012, around 5 percent of total exports, according to the World Bank.
Yudhoyono's last-minute regulation significantly lowers the minimum processing requirements for copper, manganese, lead, zinc and iron ore to be defined as concentrates. However, officials have said that such exports would only be allowed until 2017.
Under the proposed changes government officials said 66 companies, which include Freeport and Newmont, would be allowed to continue to export "processed mineral" as they have provided assurances to the government that they would soon build the necessary smelters.
"As long as they can fulfill the requirements, Freeport and tens of national miners are still allowed to export," Industry Minister M.S. Hidayat told Reuters.
More details are expected to be announced this week.
The companies likely to feel the most impact from the ban are miners of nickel and bauxite, numbering in the hundreds.
Shortly before the ban took effect, Freeport halted copper exports and said it would not resume them until there was clarity on which minerals can be shipped.
Freeport Indonesia CEO Rozik Soetjipto told Reuters he believed the company would be allowed to continue shipping copper concentrate, but was awaiting government confirmation.
Freeport, Indonesia's dominant copper producer with 73 percent market share, has not made a shipment from its remote Papua port since Dec. 15, said union official Virgo Solossa.
A company spokeswoman said Freeport continued to provide copper to a local smelter.
More than 100 mining companies have been forced to reduce or shutdown operations because of the uncertainty.
Along with Freeport, Indonesian miner Perusahaan Perseroan Aneka Tambang (Antam) also stopped nickel ore exports a few days ago, the firm's corporate secretary Tri Hartono said.
The Indonesian Mineral Entrepreneurs Association said it plans to challenge the ban in the Supreme Court and Constitutional Court, the two highest courts in the country.
An election issue?
A major economic impact could make the ban a hot political issue in this year's legislative and presidential elections in the world's fourth most populous country.
Thousands of mine workers have already been laid off ahead of the ban, sparking protests in Jakarta.
"We call on all mining workers to prepare to go on the streets and swarm the presidential palace if the government goes ahead with the implementation of the ban," said Juan Forti Silalahi of the National Mine Workers Union in a statement on Saturday.
Police have been stationed at ports and around mines to secure those places in case of public disturbances, said national police spokesman, Boy Rafli Amar.