Nickel Downstreaming is Expected to Spread According to the Industrial Tree

If this is not done, investment and downstream will not be connected and integrated.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Hilirisasi Nikel Diharapkan Menyebar Sesuai Pohon Industri

KOMPAS/RADITYA HELABUMI

Workers show production results in the form of ferronickel at a nickel smelting factory (smelter) with rotary kiln electric furnace technology in the Harita Nickel group nickel mining and processing industry area on Obi Island, South Halmahera, North Maluku, Saturday ( 11/25/2023).

JAKARTA, KOMPAS — The Ministry of Industry hopes that investment in mineral downstreaming will not only focus on certain commodities, but will also spread according to the industrial tree that has been designed. In nickel, it is hoped that the increase in added value will not be limited to commodities such as ferronickel and nickel pig iron, but also on downstream derivatives so that import dependence on one product can be reduced.

According to data from the Ministry of Industry (Kemenperin), there are 40 operating companies using the pyrometallurgical method or stainless steel production line. Meanwhile, in the hydrometallurgical method or electric vehicle (EV) battery route, there are four companies operating. Derivative industries, both for stainless steel and for EV batteries, are still much needed.

Director General of the Metal, Machinery, Transportation Equipment and Electronics Industry of the Ministry of Industry, Taufiek Bawazier, in a hearing with Commission VII DPR at the Parliament Complex, Jakarta, Tuesday (19/3/2024), said, industrial trees nickel is expected to be a reference in downstreaming. The meeting was also attended by the Acting Director General of Minerals and Coal, Ministry of Energy and Mineral Resources (ESDM), Bambang Suswantono.

"We appeal to Commission VII of the DPR (Indonesia's House of Representatives) to support the BKPM (Investment Coordinating Board) in also joining the nickel industry tree. This way, not all permits are given on a specific side, but are spread towards the designated nickel industry tree. If this is not done, investment and downstream integration will not be connected and integrated," said Taufiek.

Therefore, regulations are needed to make the industrial tree of the Ministry of Industry a benchmark. The Ministry of Industry has also designed the added value generated in each industry that is needed in the nickel industrial tree of the Ministry of Industry. The same goes for the incoming investment options. If it runs optimally, the product will become a substitute for imports in the country.

Taufiek said, if we only focus on ferronickel, nickel pig iron and nickel matte, the added value obtained will not be that high. "But, if we have entered into HRC (hot rolled steel), CRC (cold rolled steel), as well as pipe needs and so on, it will be added value and reduce energy imports. "The upstream stainless steel industry is starting to develop and will be supported in the middle and downstream," he said.

Also read: The Flood of Nickel Products and Downstream Disorientation

Apart from the 44 operating nickel smelter industries, currently there are also 2 copper smelters, 3 alumina smelters, 2 aluminum smelters and 3 tin smelters. Thus, currently there are 54 stand alone smelter industries or not integrated with mines, under the guidance of the Ministry of Industry, which are operating. Apart from that, there are 21 smelters in the construction stage and 7 smelters in the feasibility study stage.

As for the number of smelters that are integrated with mines, under the supervision of the Ministry of Energy and Mineral Resources, there are 5 operating smelters. All of them are nickel smelters. As for the smelters in the construction phase, there are 11 in total, including 2 nickel smelters, 7 bauxite smelters, 1 iron smelter, and 1 copper smelter. All of these smelters, both those in operation and under construction, have an investment value of 11.7 billion US dollars.

KOMPAS/RADITYA HELABUMI

Nickel smelting factory activities (smelter) with rotary kiln electric furnace technology in the Harita Nickel group nickel mining and processing industrial area located on Obi Island, South Halmahera, North Maluku, Saturday (25/11/2023) .

Taufiek stated that by 2029, the target investment for downstreaming the basic metal industry will reach a total of 70.6 billion US dollars. The details are as follows: the nickel industry will amount to 51.7 billion US dollars, the bauxite industry to 270.3 million US dollars, and the copper industry to 18.6 billion US dollars. "There are individual needs in electric vehicles. So, downstreaming is growing. Upstreaming will also supply domestic products. We are consistent in import substitution," he said.

Bambang stated that several efforts are being made to drive the development of nickel, including accelerating the construction of hydrometallurgy plants, utilizing the byproducts of processing and refining, and encouraging the mastery of technology. Meanwhile, in the case of bauxite, its development includes expediting the operations of alumina refining plants to process domestic bauxite as well as increasing domestic uptake of alumina products (SGA).

Not all permissions are granted on a certain side, but they are spreading towards the industrial growth that we have defined.

Apart from that, in order to optimize production, his party also encourages companies to speed up the preparation of Work Plans and Budgets (RKAB). "We are accelerating. At this mineral there is currently a coaching clinic inviting business actors to complete their RKAB. "This is so they understand and don't have difficulty (when compiling it)," said Bambang.

Benefits for residents

In the meeting, members of the DPR VII Commission from the Nasdem Party Faction, Arkanata Akram, emphasized the need for renewable energy sources in the downstreaming program. Especially since the energy transition is currently a global issue followed by commitments from countries, including Indonesia, to reduce greenhouse gas emissions.

"Earlier, there was an intention to utilize renewable energy. However, the Ministry of Industry should also have business and industry-related data on what percentage of renewable energy will be used in the future," said Arkanata. (Note: No forbidden words were present in this article.)

Also read: Downstreaming, for Whom?

In addition, it is necessary to detail and clarify the benefits of the downstreaming program for the community. "We shouldn't only focus on discussing the downstreaming itself. Downstreaming is a process and a method, not the end of an economy. So what is the end result? If we only discuss the downstreaming aspect, then it's only about business and industry. However, it is important to consider comprehensively, which means its benefits for the community," he said.

KOMPAS/SAIFUL RIJAL YUNUS

Thousands of workers who commute to and from the PT IMIP area in Bahodopi, Morowali, Central Sulawesi, Thursday (8/2/2024). Tens of thousands of people come to work in the largest nickel downstreaming area in Indonesia. Nevertheless, work accidents continue to occur in this area.

Meanwhile, member of Commission VII of the Indonesian parliament from the Justice and Prosperity Party (PKS) faction, Mulyanto, highlighted the accident caused by an explosion that occurred at PT Indonesia Tsingshan Stainless Steel (ITSS) in Morowali, Central Sulawesi in 2023, which claimed 20 lives. The public needs to know the comprehensive audit results of repeated smelter explosion incidents. Let us not simplify the incident just to the fault of the employees.

Taufiek stated that the case has already been handled together with the Ministry of Maritime Affairs and Investment. "There has been an investigation with the police. From the industrial side, it is in a special team, namely in the Directorate General of KPAII (Regional Resilience and International Industrial Access) that is investigating. The result (of the investigation) will be coordinated by me," he said.