Smelters are not the Ultimate Objective of Downstream Activities

Jakarta, January 26, 2024– Downstreaming has recently become a hot topic of discussion. This topic is strengthened along with the the presidential and vice-presidential candidates’ emphasis on the downstream agenda. According to the Big Indonesian Dictionary (KBBI), downstreaming refers to the process of converting raw materials into finished goods.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) in “Katadata Forum – After the 4th Presidential Election Debate 2024 “Mining Downstream Dilemma: Restricted or Expanded?” (25/1/2024) revealed that various forms of natural processing must remain rooted in three adhere to three crucial points: clarity and law enforcement, maximizing economic benefits, and long-term planning for post-extraction and depletion of reserves.

” Regardless of the incoming president, the focus should be on discussing long-term plans for the utilization of natural resources. We cannot allow resources to be extracted, only to result in environmental damage and the absence of a new economy, potentially leading to an increase in poverty rates. This mitigation strategy must be incorporated into our National Medium-Term Development Plan (RPJMN),” said Fabby.

Discussing mining downstream, Fabby highlighted nickel is a critical mineral in renewable energy technology. He explained that nickel is classified into two processed categories: first-class nickel for electric vehicle battery raw materials and second-class nickel for stainless steel products. Fabby observed that since the enactment of Law Number 4 of 2009 concerning Mineral and Coal Mining, which mandates domestic mineral processing, downstreaming has been encouraged, leading to the growth of planning on smelter projects or processing facilities for mining products. By 2024, there are plans to build 48 critical mineral smelters

“The more smelters, the more extraction. Merely stopping at the smelter is not the goal of the downstream process. Instead, there is a need to actively seek optimal benefits and promote sustainable job creation by establishing a battery industry for electric vehicles and various other renewable energy sectors in Indonesia,” he added.

IESR also delved into the development of the battery industry supply chain in Indonesia, which can be read in the Indonesia Energy Transition Outlook 2024 report.