In recent years, the downstream mining policy has become a new mantra for development, with the banning of nickel ore exports since January 2020 being an initial experiment. The deepening of the industrial structure through the natural resource-based downstream that we have, opens up opportunities for Indonesia to participate in global supply chains, no longer as an exporter of raw materials but as an exporter of high-value-added manufactured products.
Premature claims of the success of the downstream nickel policy based on the export ban on nickel ore were made massively by many government officials, including the President. This claim of success is often gloriﬁed by the added value successfully created from the downstream policy, which refers to the export value of a nickel. The export value of nickel ore before the downstream policy in 2018 was only in the range of US$ 3 billion, while now, in 2022, exports of downstream nickel products will reach US$ 33.8 billion (507 trillion IDR). In 2023, it is projected to exceed US$ 38 billion (570 trillion IDR). Based on the claimed success of nickel downstream, the government will expand the downstream policy to bauxite, tin, and copper in 2023 according to the mandate of Law no. 3/2020 concerning Mineral and Coal Mining (Minerba).
Downstream nickel with products in the form of matte nickel and ferronickel has been carried out in Indonesia for a long time. However, with nickel mining and processing carried out in an integrated manner that is very capital intensive, only a few companies holding KK (Contract of Work) can invest. After the issuance of Law no. 4/2009 concerning Minerba, nickel mining by IUP (mining business permit) holders has increased, triggering a drastic increase in nickel ore production and exports, especially to China, which is generally processed into NPI (nickel pig iron).
Following the mandate of the Minerba Law, which requires downstream processing, a ban on nickel ore export was implemented in 2014. This nickel ore export ban undermines IUP holders, who apparently cannot afford to build smelters but simultaneously encourages the relocation of many Chinese smelters to Indonesia to obtain raw materials. Nickel processing by the relocated smelter is dominated by reﬁning through energy-intensive pyrometallurgical plants with semi-ﬁnished nickel in the form of ferronickel, matte nickel, and NPI.