Economic Laws Sometimes Work Very Quickly

As smelters weigh cost, Indonesia's ore export ban may backfire
Indonesia's ban on exports of key mineral ores - unless they are processed in the country - risks backfiring as weaker commodity prices mean it is not cost-effective to invest in expensive smelters and refineries.

The ban, which came into effect on Jan. 12, was unveiled in 2009 as a commodities boom began to froth and Jakarta sought to extract more value from its mineral resources. But metals prices and margins have since fallen, leading to oversupply and less need for building more processing capacity.
It works more slowly for economies that import cheap labor which makes it not cost effective to invest in capital goods. Net result: lower productivity and lower wages.

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