Concerning Nickel, How Long Will Indonesia Depend on Other Countries?
Despite having abundant nickel resources, Indonesia is limited in technology and investment.
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By
ADITYA PUTRA PERDANA
·4 minutes read
The high investment costs and technological requirements mean that Indonesia is still dependent on other countries in downstreaming nickel mining. Apart from ensuring the transfer of knowledge and technology, the preparation of human resources to support the strategic nickel industry needs to be accelerated.
According to the Global Critical Mineral Outlook 2024 published by the International Energy Agency (IEA) last week, Indonesia's market share in the global supply of mining products nickel (mined output) is increasing from 34 percent in 2020 to 52 percent in 2023. Meanwhile, refined and refined products (refined output) increased from 23 percent in 2020 to 37 percent in 2023.
However, despite Indonesia leading in terms of nickel mining locations, Indonesian companies only contribute less than 10 percent of the total global production. Meanwhile, European companies contribute more than 20 percent. Chinese companies still dominate nickel supply with a contribution of around 40 percent.
Head of Macroeconomics and Finance at the Institute for Development of Economics and Finance (Indef), M Rizal Taufikurahman, Friday (5/4/2024), said, technology in mining nickel, up to Its processing and refining is controlled by developed countries. One of them is China. While Indonesia has abundant nickel resources, it is limited in technology or investment by local companies.
"So, the challenge is whether in the future we still want to rely heavily on other countries, or take a bigger role in innovation and technology in this sector? Increasing human resource capacity must be accelerated, including through education. "There needs to be a grand design of what this industry will look like in the future," said Rizal.
He added that several government efforts, such as establishing vocational schools in nickel production and processing centers, need to be ensured for their sustainability. Although not easy, everything must be thoroughly prepared. All of this is for the sake of increasing added value in every line, including how the downstreaming of nickel can truly benefit the community.
Alpha Research Database researcher Ferdy Hasiman stated that local investors have yet to be able to compete or work independently in nickel development. Besides technological challenges, large investments are also needed.
Finally, local investors are collaborating with foreign companies, including those from dominant China in the nickel processing and refining industry in Indonesia. Depending on a single country can make nickel development less optimal.
"Yes, we need to cooperate with many developed countries. However, we also need to open up investment to more nations. This includes the need for companies that prioritize ESG (environment, social, and governance) and transparency. Investment should not be hasty," said Ferdy.
Strengthening the domestic role is needed amidst the needs of downstream industries for nickel. Currently, the majority of nickel products are for stainless steel. However, the government is directing the production of raw materials for electric vehicle batteries.
Based on data from the Ministry of Industry, in the pyrometallurgical method or stainless steel production line, there are 40 companies operating. Meanwhile, in the hydrometallurgy or electric vehicle (EV) battery line, there are four companies operating. Derivative industries, both for stainless steel and for EV batteries, are still much needed.
Nickel price
Trading Economics data referring to the London Metal Exchange (LME) states that nickel prices have risen again after declining since the fourth quarter of 2023. Having touched 15,680 US dollars per ton on February 6 2024, nickel prices then continued to increase.
As of May 21, 2024, 21,247 US dollars per ton were recorded. At the end of quarter II-2024, the price is estimated to be around 19,194 US dollars per ton.
The Special Staff of the Minister of Energy and Mineral Resources (ESDM) in the field of Acceleration of Mineral and Coal Governance, Irwandy Arif, stated that the increase in nickel prices is part of the commodity cycle. Whatever the commodity, there will always be ups and downs. Currently, nickel is still needed as a raw material for the production of electric vehicle batteries.
"The main cause is supply and demand as well as changing stocks. "Nickel is needed for electric vehicle batteries, the aircraft industry and so on," said Irwandy.
Currently, Irwandy continued, the nickel production line for electric vehicle batteries has only reached nickel sulfate and cobalt sulfate, which are also follow-up products from mixed hydroxide precipitate (MHP), which is produced in factories using technology. hydrometallurgical high pressure acid leach(HPAL).
Meanwhile, the production of nickel sulfate and cobalt sulfate as precursors, which then become battery cathodes, does not yet exist in Indonesia.
Strategic minerals
Previously, the Minister of Energy and Mineral Resources issued Ministerial Decree No. 69 of 2024 concerning the determination of commodity types classified as Strategic Minerals. There are 22 commodity types that fall into the strategic mineral category, including aluminum, iron, gold, cobalt, rare earth metals, magnesium, manganese, nickel, silver, zinc, silica, copper, tin, titanium, and zirconium.
"Previously, there were 47 critical minerals, which means they are needed but may already be depleted or we need to be cautious. Meanwhile, these strategic minerals are needed to support the government's planned strategic industries. For example, the battery industry, solar industry, as well as for the health and defense industries," said Irwandy.
The determination of critical minerals is stated in Minister of Energy and Mineral Resources Decree Number 296 of 2023 concerning the Determination of Commodity Types Classified as Critical Minerals, established on September 14, 2023. There are a total of 47 designated commodities, including, among others, aluminum, cobalt, lithium, nickel, copper, and tin.
Editor:
FX LAKSANA AGUNG SAPUTRA
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