JAKARTA: Indonesia, the world’s top nickel producer, has put on hold plans to tax nickel product exports while it works on creating a price index to ease volatility tied to the London Metal Exchange (LME) benchmark, a senior government official said on Tuesday.

The government plans to launch a nickel price index by the end of 2023 and needs it to be in place before going ahead with an export levy, Septian Hario Seto, a senior official with the investment coordinating ministry, told the SMM Indonesia Nickel-Cobalt conference in Jakarta.

The index could be used to calculate royalties and any export levy, he said.

“By the end of the year, the index will be created. We are still asking for the proposal from each index provider. We will see who has the best,” he told reporters on the sidelines of the conference.

Indonesia produces a wide range of nickel products, most of which are of a lower purity grade from the underlying product for the global benchmark nickel contract on the LME.

The move to create the index comes in response to calls from consumers, producers and traders after the LME suspended nickel trading for more than a week in March 2022 as prices soared in a record-breaking surge, Septian said.

“Since the LME incident last year … we had a lot of feedback from smelters,” he said.

Septian said the index was needed because the discount between the LME refined nickel price and the market price of nickel pig iron, the main nickel product traded in the world and mostly made in Indonesia, was highly volatile.

The index could consist of nickel pig iron, mixed hydroxide precipitate and possibly nickel matte, he added.