Malaysia to ban bauxite mining for three months

Malaysia on Wednesday imposed a three-month ban on bauxite mining beginning later this month amid worries over its environmental impact, potentially affecting exports of the aluminum-making ore to Chinese smelters.

Malaysia emerged last year as a major provider of bauxite after leading producer Indonesia banned ore exports to encourage more processing at home. From January to November, Malaysia exported some 20 million metric tons of bauxite to China, the world’s biggest aluminum producer. That was nearly half China’s total bauxite imports and a sharp increase from 3.25 million tons in the same period in 2014.

Industry experts had earlier said Malaysia’s entry into the industry was a game-changer, opening a new source of bauxite to meet demand for aluminum, a metal used in cars and beverage cans that is often valued for its environmentally friendly properties.

But concerns about flimsy regulation and a lack of environmental safeguards on bauxite mining were heightened last week after environmentalists and residents blamed waste from the extraction process for polluting the waters off eastern Malaysia after days of torrential rains.

“Beginning 15 January, everything will come to a standstill,” Malaysia’s natural resources and environment minister, Wan Junaidi Tuanku Jaafar, told a news conference.

Mr. Wan Junaidi said the government would also freeze new permits for the export of bauxite for three months.

It isn’t yet clear how the ban would affect Malaysia’s exports over the longer term. Any disruption in supplies would probably force Chinese producers to turn to higher-cost suppliers in Australia and India, said Ivan Szpakowski, head of Asia commodities research at Citi.