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UPDATE 2-Indonesia announces nickel ore export ban starting in January 2020

Wilda Asmarini and Bernadette Christina

* Ban to begin on Jan. 1, two years ahead of schedule -official

* Ban will apply to all grades of nickel exports

* LME nickel price surges to most in 5 years

(Adds table of processing plants, comments from officials) JAKARTA, Sept 2 (Reuters) - Indonesia said on Monday it will stop nickel ore exports from Jan. 1, 2020, two years earlier than initially indicated, as it speeds up efforts to process more of its resources at home. Bambang Gatot Ariyono, the director general for coal and minerals at the Ministry of Energy and Mineral Resources, said the ban will be applicable to all grades of nickel ore and ordered exporters to stop shipments from that date regardless of standing contracts. "That is why we are announcing now so they have four months of transition time," Ariyono told reporters. Speculation about an expedited ban and Monday's announcement has boosted nickel prices. The three-month nickel contract on the London Metal Exchange gained 3% to $18,470 a tonne on Monday, its highest in nearly five years, adding to Friday's 9% gain. Goldman Sachs said in a note on Sunday it expects London nickel prices to reach $20,000 per tonne in three months due to the ban. Indonesia, the world's biggest nickel ore producer, accounted for 26% of global nickel ore supplies last year, according to the International Nickel Study Group, and the ban will affect the supply of ore to China, the world's biggest nickel consumer, which uses the metal to make stainless steel. Ariyono said the timetable was expedited because of the limited pool of mineable nickel resources. "The national proven reserve for nickel is only 698 million tonnes, which can only supply smelting facilities for 7.3 years," he told reporters, adding that Indonesia currently has 11 working smelters with input capacity of 24 million tonnes of ore. It has 25 more smelting facilities in the pipeline. The government had initially said it would ban nickel ore exports from January 2022, according to a rule released in 2017. It is retaining that later date for the end of exports of bauxite and copper concentrates. Local miners have complained that their smelter projects will stall if exports are cut off, stopping the revenue stream needed to finance development. Ariyono on Monday said miners should not rely only on revenue from exports to export their smelters. State miner PT Aneka Tambang (Antam) is ready to support the new policy, Chief Executive Arie Prabowo Ariotedjo said in a text message, adding that the rules will benefit companies that already have smelters such as Antam. The government aims to have 36 nickel smelters by 2022 with a total input capacity of 81 million tonnes. Ariyono, said there are four mega projects among the 25 smelters currently in the pipeline. These projects will help Indonesia accelerate the development of its electric vehicle (EV) battery industry, he said. Indonesia has put the export ban in place to support the EV battery industry by keeping cobalt resources, which are important for lithium batteries, in the country since they are typically found in the low-grade nickel ores that are shipped out, said Sukhyar, an official with the Industry Ministry, who previously was director general for coal and minerals. "We are talking about building industry for electric vehicles, which need cobalt as material. Why are we exporting them?," he said. The following is a table of the four largest nickel processing plants currently being constructed in Indonesia.

Project Investment Input Output

capacity

Huayue $1.28 bln 11 mln 60,000 tonnes of nickel,Bahadopi tonnes 7,800 tonnes of cobaltQMB Bahodopi $998.5 mln 5 mln 50,000 tonnes of nickel,tonnes 4,000 tonnes of cobaltHalmahera $10.6 bln 8.3 mln 278,534 tonnes of mixedPersada Lygend tonnes hydroxide precipitate,

nickel sulphate, cobalt sulphate

Smelter Nikel n/a 2.4 mln 76,500 tonnes of mixedIndonesia tonnes hydroxide precipitate,

nickel sulphate, cobalt sulphate

(Reporting by Wilda Asmarini, Bernadette Christina Munthe; Writing by Fransiska Nangoy; editing by Christian Schmollinger and Jane Wardell)