Reuters reported that Japanese nickel smelters will beseverely impacted by Indonesian bans on exports of unprocessedmineral ores due in January as Japan imports 43% offerro nickel materials from Indonesia.

With a current account deficit at a near record high, theIndonesian government is scrambling to ease nationalisticresource rules that were passed more than a year ago includinga ban on mineral ore exports from January 2014.

Southeast Asia's largest economy is the world's top exporterof nickel ore, thermal coal and refined tin and home to theworld second-biggest copper mine.

Mr HiroshiYao chairman of Japan Mining Industry Association said that "So far, Indonesia has not come up with any specific actionsto ease its new mining law. We are worried about it. If Indonesia's export restrictions of unprocessed mineralore go into effect next year, an impact on Japanese nickelsmelters will be big."

Japan imported 35,000 tonnes of ores to make ferro nickel interms of nickel content from Indonesia in 2012, representing 43% of total import of 81,000 tonnes. Ferro nickel is an alloy made from iron and nickel and isused as a raw material in stainless steel.

Last week, Sumitomo Metal Mining Company Limited, Japan'sbiggest nickel smelter said that it planned to import more ore tomake ferro-nickel from the Philippines and New Caledonia ifIndonesia's export ban on unprocessed mineral ore was introduced in January.

Japan also imported 87,000 tonnes of copper ore in terms ofcopper content from Indonesia last year but it only represents7% of its total imports.

Mr Yao said that "Copper ore supplied from Indonesia can be replaced asJapan's dependency on Indonesia is low and global copper marketis over supplied. But Japanese companies holding a stake in a copper mine anda smelter in Indonesia also had concerns about the possibleimpact on operations of the mine and smelter.”