ESDM Official Responds to Criticism Towards Nickel Downstreaming

TEMPO.CO, Jakarta - Recent criticisms have arisen regarding the nickel downstreaming process, which is perceived to benefit China more. In response, Irwandy Arif, the Special Staff to the Minister of Energy and Mineral Resources (ESDM) for Accelerating Mineral Resources Governance, stated that Indonesia is a non-aligned country for nickel smelter investment.

"So, we are ready to accept cooperation with any country," he told Tempo on May 10, 2024.

Irwandy confirmed that nickel smelter owners in Indonesia are indeed dominated by companies from China. "Chinese companies do indeed own the majority of nickel smelters in Indonesia," he said.

According to Irwandy, China is aggressively offering their smelter technology. The offered technology includes the Rotary Kiln-Electric Furnace (RKEF), which processes nickel ore into nickel pig iron (NPI) for iron and steel production.

There is also the High Pressure Acid Leaching (HPAL) technology for purifying limonite nickel for electric battery products.

In addition to technology, Chinese investors also come with financing offers. According to him, other countries must be prepared to compete in Indonesia.

Fahmy Radhi, an Economic Energy Observer from Gadjah Mada University (UGM), said that the added value of nickel downstreaming in Indonesia has mostly flowed to China.

"Since the ban on raw exports and downstreaming, more investors have entered the smelter industry, but most of them are from China, so the added value is enjoyed by that country," he said on May 10, 2024.

Furthermore, he asserted that the development of nickel downstreaming has not shown maximum results because the exports are only limited to NPI and ferronickel, as the downstream electric battery industry has not yet been established.

He stated that the policy of nickel downstreaming and other mineral commodities is correct, but there is still no clear roadmap outlining the industry from upstream to downstream. When the downstreaming program surfaced, he hoped that miners could independently or through consortiums establish smelters.

Faisal Basri, an economic observer from the University of Indonesia, expressed similar sentiments. According to him, China is the biggest beneficiary of the nickel downstreaming business. He stated that most nickel refining factories collaborate with that country.

"Ninety percent of the added value goes to China, economically we lose," said Faisal at an event in Central Jakarta on May 4, 2024.

He underlined that the government must conduct economic analyses related to the nickel business in Indonesia because environmental damage caused by mining activities is also not factored into the economic calculation.

"That should be considered a loss, but so far it has never been calculated," he said.

ILONA ESTHERINA

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