By: Hana Lestari )*
The government continues to strengthen the strategy of downstreaming natural resources as a strategic step in increasing the added value of domestic products. Downstreaming is not only aimed at reducing dependence on raw material exports, but also to encourage national industrial independence, expand job creation, and strengthen Indonesia’s economic structure to be more competitive globally.
These efforts are evident in the downstreaming policy of the mining sector which is now a top priority. The BUMN Mining Industry Holding, MIND ID, through its subsidiaries such as PT Vale Indonesia Tbk and PT Aneka Tambang Tbk, is building a nickel processing facility with High Pressure Acid Leach (HPAL) technology in Sorowako and Morowali. This technology is designed to process low-grade laterite nickel ore, especially the limonite type, into the main raw material for electric vehicle batteries, namely Mixed Hydroxide Precipitate (MHP).
Corporate Secretary of MIND ID, Pria Utama, explained that the implementation of HPAL is proof that Indonesia is able to utilize advanced, environmentally friendly technology. HPAL utilizes high heat and pressure as well as sulfuric acid to extract nickel and cobalt. The advantages of this technology lie not only in its ability to process previously unexploited nickel ore, but also in its efficiency in energy use and the low carbon emissions produced.
The implementation of HPAL technology is an important milestone in strengthening the national nickel industry supply chain that is efficient and sustainable. In addition to supporting green economic growth, the downstream products will be a crucial component in accelerating the energy transition and electrification of transportation, in line with the clean energy policy being promoted by the government.
In other sectors, the Ministry of Energy and Mineral Resources (ESDM) is also actively encouraging coal downstreaming. Director General of Mineral and Coal, Tri Winarno, emphasized that Indonesia has sufficient coal reserves for the next six decades. In this context, the government continues to facilitate coal processing and refining projects to produce higher added value, while reducing dependence on raw coal exports.
As part of this step, the government has opened up space for the development of technologies such as gasification and clean coal technology, and supported the Carbon Capture and Storage (CCS) and Carbon Capture, Utilization and Storage (CCUS) study initiatives. This approach shows that Indonesia is not only focused on the economic aspect, but also pays attention to the environmental impact in every stage of national energy development.
The success of downstreaming is also very much determined by the readiness of the land and legal certainty over the space to be used. In this case, the role of the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency (ATR/BPN) is crucial. Deputy Minister of ATR/Deputy Head of BPN, Ossy Dermawan, explained that mature land governance and spatial planning are the main foundations in supporting downstreaming.
The Ministry of ATR/BPN is not only tasked with ensuring the legality of land ownership, but also ensuring that areas designated for industry are in accordance with the national spatial plan. Without such certainty, investors will face major obstacles in realizing their downstream projects. The provision of clear and clean land is an absolute requirement for the industrial infrastructure development process to run smoothly and sustainably.
The synergy between technical ministries, state-owned enterprises, and the private sector in the downstreaming process shows that the government has a long-term vision in building a strong national industrial structure. This approach is not carried out sporadically, but is based on systematic planning, progressive regulatory support, and supervision of environmental and social aspects.
With the use of processing technology such as HPAL in the nickel sector, as well as the development of clean energy in the coal sector, Indonesia is increasingly showing its position as a country that is serious about developing high value-added industries. The government is also actively building a supporting ecosystem, including through strengthening fiscal policies, developing basic infrastructure, and simplifying the licensing process to attract downstream investment in various regions.
The government has demonstrated its commitment to making downstreaming part of the grand agenda of sustainable economic development. Through an integrated and future-oriented approach, Indonesia is not only increasing the added value of domestic products, but also strengthening the foundation towards industrial independence and national economic resilience.
In addition, the success of downstreaming also depends heavily on the development of competent and adaptive human resources (HR) to modern industrial technology. The government continues to encourage improving the quality of vocational education and job training, especially in areas that are centers of downstream industrial activities.
Collaboration between the world of education, industry players, and local governments is a key strategy to ensure that local workers are able to fill the needs of the ever-growing downstream sector.
No less important, strengthening domestic research and innovation is also a major pillar in supporting the sustainability of downstreaming. National research institutions and universities are encouraged to actively develop processing technologies that are in accordance with the characteristics of Indonesia’s natural resources. That way, Indonesia will not only become a place for extracting raw materials, but also a center for relevant and applicable technological innovation.
*) Macroeconomic Analyst – Nusantara Economic Research Institute
