(recasts, adds quotes from industry assoc)
By Wilda Asmarini
JAKARTA, Oct 7 (Reuters) - Indonesia could export up to 15 million tonnes of nickel ore in 2017 if it amends a ban on unprocessed ore exports, a mining ministry official said on Friday.
Indonesia banned metal ore exports in early 2014 to encourage miners to build smelters to create jobs and shift exports from raw materials to higher-value finished metals. Indonesia's nickel ore exports had increased sharply before the ban was implemented, hitting about 60 million tonnes in 2013.
But the ban cost Indonesia - once the world's top nickel ore exporter and a major supplier of bauxite for aluminium - billions of dollars in lost revenue.
To get smelters built, though, these rules now need to be changed again, said Teguh Pamudji, secretary general at the Energy and Mineral Resources Ministry, amid ongoing discussions of a mining policy shift.
Under the proposed changes, nickel and bauxite mine permit holders that have committed to building smelters would be allowed to export minerals, he said.
The government has also proposed allowing miners of copper, zinc, lead, manganese and iron to continue to export concentrates until 2022, provided they are building smelters, Pamudji said.
The proposed changes would provide a way around a 2017 deadline for full domestic processing, where "only seven" of up to 27 smelter projects were almost complete, Pamudji said.
"The rest (of the smelters) are only 30 percent or 50 percent completed - that's why the government would give them more time," Pamudji said.
Exports of unprocessed rare earth metals were also being considered, he said.
The proposed changes could be a breakthrough for miners such as U.S. giant Freeport-McMoRan Inc.
But many in Indonesia's newly budding smelter industry say changing the rules would do more harm than good for Southeast Asia's largest economy, possibly undermining metal prices and putting up to $12 billion in investments at risk.
Nickel prices would "collapse" if the proposal to lift the ban is carried out, Jonatan Handojo, Executive Director of Indonesia's main smelter association, told Reuters by phone.
Handojo said "nickel prices go down straight away" whenever the government says it is considering allowing exports, and prices could sink below $9,000 per tonne if the ban is lifted.
London benchmark nickel prices have retreated from a seven-week high hit last week, and are currently at around $10,250 a tonne. (Reporting by Wilda Asmarini; Writing by Fergus Jensen; Editing by Tom Hogue)