A surge in bauxite investment, which managed to overtake nickel in\nthe second quarter of 2026, has become a new signal in the national\ndownstream agenda. This shift occurs as the development of the nickel\nindustry remains mired in debate, with critics arguing it has not yet\nfully moved into high-value-added manufacturing stages.<\/p>\n
Minister for Investment and Downstreaming\/Head of the Investment\nCoordinating Board (BKPM) Rosan Perkasa Roeslani revealed that\ninvestment in the downstream sector in Q2 2026 reached Rp152.7 trillion,\nan increase of 5.7% compared to the same period last year. This figure\nis equivalent to 29.8% of the total national investment realisation\nduring April\u2013June 2026. Rosan stated that the contribution of downstream\ninvestment is approaching one-third of total national investment,\nreflecting growing investor interest in natural resource-based\nprocessing industries.<\/p>\n
Rosan noted a shift in the main commodity driving downstream\ninvestment. While nickel has historically dominated, in Q2 2026 that\nposition was taken over by bauxite for the first time. In detail, Rosan\nsaid the investment value for bauxite reached Rp40.1 trillion, while\nnickel was in second place with Rp29.4 trillion. \u201cUsually nickel is\nalways number one. Well, this time there is a shifting, bauxite becomes\nnumber one. This happened because there are several bauxite project\ndevelopments carried out by both domestic and foreign investors,\u201d he\nsaid during the delivery of the first half of 2026 investment\nrealisation report at the Presidential Office. Nevertheless, nickel\ndownstream investment realisation remained the highest throughout the\nfirst half of 2026 with a value of Rp71 trillion, followed by bauxite\nwith a realisation of Rp53.8 trillion.<\/p>\n
Rosan viewed this change as an indication that downstream investment\nis beginning to expand to other commodities beyond nickel. However, the\ngovernment remains committed to accelerating downstream development in\nother sectors such as palm oil, rubber, timber, silica sand, and oil and\ngas. He explained that nickel downstreaming has now entered a much more\nadvanced stage compared to other commodities. Indonesia, Rosan said,\nalready has a relatively complete supply chain for the electric vehicle\n(EV) battery industry. \u201cFor nickel, we almost have a complete ecosystem,\nstarting from nickel ore, nickel smelting, nickel sulfate, nickel matte,\ncathode, anode, cell battery, battery pack, to battery recycling,\u201d he\nsaid. This development model, Rosan continued, will be applied to other\nstrategic commodities, including bauxite, palm oil, rubber, timber, and\nsilica sand, to produce higher value-added products.<\/p>\n
Managing Director of Energy Shift Indonesia (ESI) Putra Adhiguna said\nthe dominance of bauxite investment over nickel needs to be scrutinised\nseriously because it occurs when the industrialisation stages of nickel\nare still relatively shallow. According to him, nickel downstream\ndevelopment should be directed towards more complex manufacturing stages\nto create greater added value and employment. \u201cThis is worrying because\ncurrently the industrialisation stage of nickel is still shallow and\nactually needs to be pushed towards the next stage to create true\nindustrialisation, where the job creation potential could be five times\nthat of the current downstreaming,\u201d he said. Putra assessed that this\nphenomenon simultaneously indicates that investment in the early stages\nof nickel downstreaming is beginning to reach a saturation point. The\nconstruction of processing facilities or smelters, which has been the\nmain focus of investment in recent years, is considered to have entered\na saturation phase. This condition is making investors start looking for\nopportunities in other commodities that still offer wider development\nspace. He added that this situation should serve as a lesson for the\ngovernment not to open the investment tap too wide without mature\nindustrialisation planning. According to him, the downstream strategy\nneeds to be accompanied by a clear roadmap regarding job creation,\nadvanced industrial development, and the direction of the economic\ntransition to be built.<\/p>\n
Conversely, Economist from the Center of Reform on Economics (CORE)\nIndonesia Yusuf Rendy Manilet said it is still too early to conclude\nthat nickel has lost its position as the main driver of downstream\ninvestment in Indonesia. He said the downstream investment realisation\ndata actually shows that the nickel industry is beginning to enter a\nmore mature phase after massive processing chain development in recent\nyears. He explained that the remaining investment in the nickel sector\ncurrently consists more of industrial deepening that requires more\ncomplex technology and larger capital. Therefore, the investment\nslowdown does not reflect a weakening of the nickel sector, but rather a\nphase change in its industrial cycle. \u201cAlmost the entire processing\nchain has developed, from ferronickel, nickel matte, nickel sulfate, to\nraw materials for electric vehicle batteries. At this stage, greenfield\ninvestment does tend to slow down because the basic capacity has been\nlargely built,\u201d said Yusuf. Going forward, Yusuf believes the government\ndoes not need to shift focus away from nickel downstream development.\nInstead, the government needs to expand the downstream portfolio so that\nthe national investment structure is more diverse. Dependence on a\nsingle commodity is seen as making national investment vulnerable to\nglobal price fluctuations. Diversification into bauxite, copper, tin,\nand silica sand can strengthen the foundation of national industry.\nHowever, the development of these sectors needs to be carried out in a\nmeasured manner to avoid repeating the problems that occurred in the\nnickel market.<\/p>\n
Meanwhile, Secretary General of the Indonesian Nickel Miners\nAssociation (APNI), Meidy Katrin Lengkey, assessed that the investment\ncontribution of nickel mineral downstreaming remains optimal.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/new-shift-in-indonesias-downstream-investment-map-amid-nickel-challenges-1784512218", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }