Indonesia's Nickel Downstreaming Continues as German Expresses Interest

TEMPO.CO, Jakarta - The German government continues to express interest in Indonesian raw nickel products. This was revealed during a bilateral meeting between the Coordinating Minister for Economic Affairs, Airlangga Hartarto, and the German Vice Chancellor, Robert Habeck, on May 6, 2024. During the meeting, Robert inquired about the possibility of Germany obtaining exports of raw nickel from Indonesia.

The discussion was uploaded to the official Instagram account of the Coordinating Ministry for Economic Affairs on May 8, 2024. In response, the Special Staff to the Minister of Energy and Mineral Resources (ESDM) for Accelerating Mineral Governance, Irwandy Arif, stated that the Indonesian government remains steadfast in its commitment to downstreaming.

"The government adheres to existing regulations, especially laws that require mining commodities to be processed and refined domestically," he said when contacted by Tempo on May 10, 2024.

The export of raw nickel has been banned since January 1, 2020, as stipulated by Ministerial Regulation No. 11 of 2019. According to the regulation, nickel ore must first be processed into derivative products such as Nickel Pig Iron or Ferronickel before being allowed for export.

In the following years, export bans were also imposed on other commodities, such as bauxite ore for aluminum products, which are currently prohibited from being exported. Law No. 3 of 2020 concerning Minerals also mandated a ban on mineral exports since June 10, 2023.

The ban on the export of raw nickel has been strongly opposed by countries in Europe. The European Union (EU) previously filed a complaint against Indonesia to the World Trade Organization (WTO) in early 2021. In October 2022, Indonesia was declared to have lost the EU's lawsuit at the WTO, prompting the government to decide to appeal.

Irwandy stated that the appeal process is still ongoing. However, the government is also considering a middle ground for the benefit of various parties, including by building communication channels with the EU.

"There is ongoing communication between the Indonesian government and the EU to find a win-win solution, but the results are not yet known," he said.

He assured that the export of raw nickel remains prohibited. His team has been actively building cooperation between ministries to prevent illegal exporters. "There are three efforts: digitalization, formalization, and law enforcement. This process is ongoing, but it's not easy," he said.

Fahmy Radhi, an Economic Energy Observer from Gadjah Mada University (UGM), stated that Europe will continue to strive, either through lawsuits or lobbying the Indonesian government, to obtain raw nickel, which is cheaper than derivative products.

According to him, the government must also be cautious in making decisions because European countries may restrict cooperation or exports of certain commodities from Indonesia to Europe.

ILONA ESTHERINA

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