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How could the Indonesian export ban affect BHP Billiton Limited?

While it is likely that a number of Australian miners will avoid Indonesia’s new bans on exports of some raw materials, others are left considering the full impact that the ban could have on their operations and overall businesses.

The country’s ban is designed to stop exports of unprocessed ore. This would force companies to build refineries and smelters on Indonesian soil, stopping foreign countries from exploiting the Asian nation’s resources.

The ban came as good news for Australian nickel miners. Indonesia accounted for a large portion of the world’s nickel supplies, so the export ban saw nickel’s price rise to fresh highs. Western Areas Ltd (ASX: WSA), Sirius Resources N.L. (ASX: SIR) and Poseidon Nickel Ltd (ASX: POS), each climbed strongly on Monday following the ban’s implementation.

The nickel export ban also came as good news for BHP Billiton Limited (ASX: BHP). The mining heavyweight has made its intentions clear that it wishes to exit the nickel market, and an increase in nickel prices will create a more favourable environment in which to sell its assets at a greater price.

On the other hand, it could also have a negative effect on BHP’s coal division – the company has been developing a large coal project named “Indomet” in Indonesia’s Borneo. The mine has yet to begin producing coal and the company is in no rush to turn it into a major mine as coal prices have been falling, but it will still need to assess how the ban will impact its prospects.

Other Aussie companies such as Orpheus Energy Ltd (ASX: OEG), Hillgrove Resources Limited (ASX: HGO) and Indo Mines Limited (ASX: IDO), are also yet to understand the full extent of the bans and how they will impact on their businesses.

Foolish takeaway

Although there are many uncertainties regarding the new bans, analysts have given their view that the ban would have much less impact on markets than first thought.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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