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.

Spurring the Electric Vehicle Battery Industry Sustainability

Farid Wijaya, Analis Senior Bahan dan Energi Terbarukan, Institute for Essential Services Reform (IESR)

Jakarta, December 19, 2023 – In recent years, energy transition has become a significant focus in various countries, including Indonesia. President Joko Widodo’s (Jokowi) has been promoting the shift from conventional energy sources to renewable energy. One of the strategic steps emphasized is the development of electric vehicles. This support is realized through various incentives, including tax breaks, to accelerate the growth of the electric vehicle industry and market expansion.

Farid Wijaya, Senior Analyst of Renewable Energy and Materials at the Institute for Essential Services Reform (IESR), explained that the battery is a crucial component in electric vehicles that enables high performance and efficiency. For this reason, nickel plays a critical role in producing electric vehicle batteries. According to the International Energy Agency (IEA), the shift towards sustainable energy will increase the demand for nickel in the global market, particularly for environmentally friendly vehicles that use electric batteries. By 2040, electric vehicles will account for 58 percent of global vehicles.

“Unfortunately, increased demand for nickel can result in greater reliance on natural resources. Nickel mining and refining processes can cause deforestation, water pollution, and ecosystem damage. Therefore, we must manage it responsibly and ensure it meets environmental impact analysis (AMDAL) and environmental standards. Additionally, we must also consider social justice aspects when managing nickel mining,” said Farid Wijaya at the Forum Group Discussion (FGD) with the title “Electric Vehicle Battery Supply Chain Electricity: Working Together to Build a Sustainable Supply Chain” organized by Traction Energy Asia on Tuesday (19/12). 

Farid mentioned that the nickel mining and refining industry has many issues related to human rights violations and environmental damage. According to IESR’s analysis, several things need to be considered to optimize nickel downstream through environmentally friendly industrialization. Firstly, the nickel mining and refining governance licensing process needs to be reviewed. License revocation and fines should be applied in cases of administrative, environmental, and social injustice issues.

“Secondly, creating a road map for each industry to decarbonize. Third, the development and implementation of Green Industry Standards (SIH) for nickel mining and refining,” said Farid Wijaya. 

Furthermore, Farid emphasized the improvements needed to optimize nickel downstream through environmentally friendly industrialization, such as using environmentally friendly clean technology, energy conservation, compliance with environmental standards, and analysis of AMDAL. There is also worker security and safety and stakeholder consultation. 

On the other hand, Farid explained that the world would be flooded with large lithium-ion batteries that have reached the end of their life and need to be disposed of as the number of electric vehicles on the road increases globally. Recycling is, therefore, essential to recover most of the battery’s active material. The International Energy Agency (IEA) estimates that by 2040, 10% of demand can be met by recycling used batteries.

“If used lithium-ion batteries (LIBs) are disposed of as such and stockpiled in large quantities, it can cause infiltration of toxic heavy metals into underground water, resulting in environmental pollution. Similarly, incinerating used LIBs as solid waste can generate various toxic gases, such as hydrogen fluoride (HF), from the electrolytes in LIBs, which can pollute the atmosphere. Therefore, proper waste treatment of these used batteries is crucial. Recycling is also essential to reduce dependence on imports,” said Farid Wijaya.

Multi Stakeholders Partnerships in Emerging Technologies to Accelerate Energy Transition in Indonesia

Kolaborasi Multisektoral

Jakarta, March 6, 2023 – The Clean, Affordable and Secure Energy (CASE) Program of Indonesia alongside the Ministry of Planning and National Development/National Development Planning Agency (Kementerian PPN/Bappenas) launched a series of multi stakeholder discussions ahead of the Indonesian Sustainable Energy Week (ISEW) that will be hold on October 2023. The discussions were kicked off under the theme of “Emerging New Technologies to Support Energy Transition in Indonesia”, where different experts address the Indonesian context of technologies for renewable energy and the challenges faced to implement them. 

Devi Laksmi, Coordinator of Conservation Energy Development Working Group of the Ministry of Energy and Mineral Resources (MEMR), stated the renewable energy target of Indonesia which should reach around 23% by 2025 and how the country still has massive gaps to achieve this said target. MEMR is currently developing its strategy to maximize RE potentials. 

Moving forward with the discussion, Mentari Pujantoro, Project Manager of Agora Energiewende said the global carbon emission has reached its historical peak in 2022 which is caused by fossil fuels and energy consumption. Renewables, Energy Efficiency and Renewable-based Electrification can contribute to 70% of worldwide emission reduction.

Indonesia needs to identify the existing technologies and their roles first before moving on to new technologies,” said Mentari.

Badariah Yosiana, Programme Officer the International Renewable Energy Agency (IRENA) explained the opportunities of renewable energy utilization towards Indonesian economic growth. Energy technologies could benefit the industry sector.

“For example green hydrogen could be utilized as a clean energy source and as a producer of Nickel, Indonesia could become a battery producer and exporter which would contribute to the integrated electric vehicle (EV) supply chain and solar PV manufacturing,” stated Badariah. 

Beni Suryadi, Manager of ASEAN Centre for Energy stated that although renewable energy such as wind and solar will dominate the energy mix in Indonesia starting from 2031, however not a single country can reach 100% net zero emission just from utilizing both energy.

“In other parts of the world, there have been debates on the possibility of Nuclear as a secure and reliable option to replace coal. However, some still deemed this clean source of energy inflexible due to the safety requirements,” said Beni. 

After three panelists presented different technologies and their feasibility, Prof. Dr. Ir. Suwarno, M.T., Lecturer of Bandung Institute of Technology, Professor of School of Electro Engineering and Informatics addressed a critical question of the country’s readiness of these technologies. He raises an issue about human resources, acceptance, awareness and regulations that would contribute heavily to the process of energy transition in Indonesia. As an academic himself, he pointed out that education and research institutes will play massive roles in preparing the skilled human resources needed to succeed. 

Mr Zainal Arifin as the Executive Vice President of Engineering and Technology, State Electricity Company (PLN), said the challenges faced by Indonesia: over capacity and the trilemma of energy to ensure affordability, reliability and sustainability. Until now, the only energy source which could cover all three is hydro power according to PLN. He pointed out that in developing strategies for energy technologies, flexibility and adaptability have important roles as it is not a linear process and will be implemented in the long run. 

Finally, Mr. Agus Tampubolon as the Program Manager of CASE wrapped up the discussion and presented the timeline of discussions, which will be held four times with different topics. 

“These next discussions will focus on one topic at a time for a deeper conversation and all the findings will be presented at Indonesia Sustainable Energy Week (ISEW) in October 2023”, said Agus.