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Indonesia will not approve any new mining output quotas for the rest of this year, government official Septian Hario told Reuters on Tuesday.

The country’s mining quota distribution has already taken a hit in recent months after the government reverted to an older, more complex approval process in an effort to deal with illegal mining activity.

Last month, Indonesia’s Attorney General Office arrested the former director-general of Indonesia’s Ministry of Mining of Coal, Ridwan Djamaluddin, over his alleged involvement with illegal nickel mining. Djamaluddin was accused of helping to grant nickel ore licences to several groups of miners who then proceeded to mine in areas that were not covered by their licenses. The Indonesian Government said the unlawful activity cost it $375m (Rp5.77trn) in lost revenue.

Nickel miners in the country have also come under fire this year for alleged land grabbing from local communities. Protests at various sites have also been rife as workers demand better pay and safety standards. In March, Indonesia’s President, Joko Widodo, pledged to improve monitoring of environmental standards for mining nickel as concerns over the impacts of producing the metal continued to grow.

Prices of nickel ore in Indonesia, which is currently the world’s largest nickel producer, have soared in recent weeks, largely due to an ongoing delay in quota approvals.

Septian Hario Seto, a Deputy Minister at Indonesia’s Coordinating Ministry for Maritime Affairs and Investment, told reporters on the sidelines of a Fastmarkets conference that a new mining quota application system will be available to nickel mining companies from October, adding that applications will be accepted from November. After this, the government will begin to process applications for 2024.

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By GlobalData

In May, the government announced plans to launch a nickel price index by the end of this year in an attempt to curb market volatility. Septian told Reuters that an official update on this will come in November.