Lembaga Penyelidikan Ekonomi dan Masyarakat – Fakultas Ekonomi dan Bisnis – Universitas Indonesia

Balancing Act: Complementary Strategies for Indonesia’s Sustainable Nickel Downstream Industry

nikel indonesia

Indonesia, rich in geological and mineral resources, holds the world’s largest reserves of nickel and tin, and ranks high for other minerals like coal and copper. The demand for nickel has surged, driven by its vital role in the electric vehicle (EV) industry, with global demand growing at a 10% annual rate from 2019 to 2023. In response, Indonesia has prioritized nickel downstreaming to maximize its mineral wealth and support economic growth through policies such as the nickel ore export ban and the development of industrial zones. 

While the downstream strategy has boosted exports and economic growth, its benefits remain uneven. Despite high growth rates in nickel-producing regions like North Maluku and Central Sulawesi, poverty reduction and employment gains are limited. Additionally, the environmental costs, including deforestation, river pollution, and high carbon emissions, have been significant. Nickel production, relying on coal-fired power plants, emits 59 tCO2e per ton, exceeding global benchmarks.

Socially, nickel mining has led to land grabbing, forced displacement, and poor working conditions, with numerous accidents and violations of workers’ rights. This calls for urgent reforms to ensure the industry’s sustainability, with a focus on reducing environmental harm, improving social conditions, and enhancing value-added production.

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