The Indonesian government has announced it will ease a ban on imports of scrap metal for the steel industry in a bid to help producers in the nation.

Industry minister Agus Gumiwang Kartasasmita told Reuters the steel industry is currently only using around 40 per cent of its capacity, which is partly because companies do not have the materials they need for production.

It is hoped that by lifting regulations on scrap metal imports for use as raw material by these companies, Indonesia will not need to import as many steel billets from other countries.

Back in November last year, Indonesia made the announcement that it would be classing scrap metals including aluminium, ferrous and copper scrap as waste, meaning they would be required to comply with new import regulations and be placed on a list of dangerous and poisonous materials.

At the time, the US trade group Institute of Scrap Recycling Industries criticised the move as so restrictive it could significantly damage trade.

Only direct shipments of scrap - from one country straight to Indonesia without stops - were permitted, and rules were tightened to require exporters to be listed on documentation for potential verification.

In order to import such products, importers had to have a licence and obtain permits from the ministries of industry, environment and trade.

Now, the new government is saying it wants to reverse this and exclude scrap metal from the list, Reuters reports.

"We've decided for scrap metal, we will relax their imports ... because we can see the need for scrap metal in the domestic market," Mr Kartasasmita said.

This could potentially reduce the number of permits required for shipments, making it easier for businesses that want to trade in and with Indonesia.

Indeed, it is thought five million tons of scrap metal could be imported once the ban is relaxed, providing a vital boost to the steel industry as well as suppliers of raw materials.