Indonesia has already made the headlines for its nickel and coal export bans, but last week president   Joko Widodo reiterated plans to ban exports of copper concentrate and bauxite - the latter from 2022.

The country hopes banning exports will encourage more domestic processing capacity.

A loosening of the rules is not out of the question after Indonesia granted exemptions to ore processing projects that are under construction and on schedule in 2021, while projects running behind schedule also able to be recommended for approval.

"We also note that, although Indonesia banned copper concentrate exports back in 2014 alongside bauxite, the impact on copper production was much more limited," said Morgan Stanley

However, if exemptions are not granted, Morgan Stanley said the proposed ban "would be supportive for prices in our view, as importers from Indonesia will likely need to source concentrate volumes elsewhere, which could push the copper market into deficit until trade flows adapt and new smelting capacity ramps up".

Ramp up at the Grasberg mine means Indonesia is forecast to represent 4% of global mined supply by 2023, up from 2.4% in 2020. Morgan Stanley noted smelting capacity in the capacity was rising, with the Grasberg smelter due to be completed at the end of 2023 and the Wedco due to start up in 2024.

"[Smelting capacity] will likely lag mine growth until 2025, meaning as much as 670,000t of copper in concentrate exports could be held off the market in 2023," said Morgan Stanley.

However, further growth in smelting capacity means almost all domestic concentrate production will be absorbed by 2025, said the bank.

On the bauxite front, Morgan Stanley said the proposed ban would likely have a limited impact on the global aluminium market, mainly because of the abundance of the raw material and potential for ramp-up in other parts of the world - particularly Guinea.

A growing number of alumina refineries being built in Indonesia should also hoover up most of the country's bauxite production.