Mohammad Faisal, an economist from the Centre of Reform on Economics\n(CORE) Indonesia, stated that nickel downstreaming is beginning to drive\nchanges in the economic structure of several regions in Sulawesi. The\ndevelopment of mineral processing industries is causing areas that\npreviously relied on the mining and agricultural sectors to shift\ntowards the industrial sector.<\/p>\n
This shift is visible in Morowali and North Morowali, Central\nSulawesi, which have experienced growth in mineral processing-based\nindustrial activities over the last decade. Industrial development has\nalso expanded investment activities, labour force, and supporting\neconomic activities around processing zones.<\/p>\n
\u201cIn the past, Morowali was dominated by mining and agriculture; now,\nmore than 75 per cent of its economy is supported by the industrial\nsector,\u201d said Faisal, as quoted on Thursday (1\/10\/2026).<\/p>\n
According to him, this development demonstrates the impact of\ndownstreaming on the economies of mineral-producing regions. The\ndevelopment of processing industries extends the mineral value chain\nwithin the country while simultaneously increasing the role of the\nindustrial sector in the regional economic structure.<\/p>\n
On the other hand, the electric vehicle value chain in Indonesia is\nbeginning to show integration from upstream to processing activities.\nFaisal noted that the upstream sector has achieved a higher level of\nmaturity, whereas midstream and downstream activities are still\ndeveloping.<\/p>\n
\u201cWhile we have high maturity in the upstream sector, the midstream\nand downstream sectors are still developing. However, this could\nincrease rapidly in the future, and the impact on regional economies\nwill become even greater,\u201d he said.<\/p>\n
Mineral processing industrial development is also occurring in South\nSulawesi. Statistics Indonesia (BPS) recorded that the economy of South\nSulawesi grew by 5.59 per cent in the second quarter of 2026 compared to\nthe same period the previous year, with GRDP reaching IDR 206.70\ntrillion at current prices.<\/p>\n
Nickel processing investment is also strengthening the development of\nthe industrial ecosystem in Sulawesi. PT Vale Indonesia Tbk, part of the\nMIND ID Group, is developing several growth projects in Pomalaa,\nMorowali, and Sorowako as part of its nickel value chain expansion.<\/p>\n
These developments include High Pressure Acid Leach (HPAL)\ntechnology-based facilities to produce Mixed Hydroxide Precipitate\n(MHP), an intermediate product that can be further used in the battery\nmaterial supply chain. The HPAL development is linked to the Pomalaa,\nBahodopi, and Sorowako Limonite projects.<\/p>\n
Faisal assessed that the significant benefits of downstreaming in the\nfuture will not only depend on increasing production capacity. The\nindustry\u2019s connection to the local economy, workforce development,\ninvolvement of local businesses, and environmental impact management are\nalso crucial components for ensuring that economic transformation can\noccur sustainably.<\/p>\n
With the expanding processing capacity and mineral value chain,\nSulawesi holds a vital position in resource-based industrialisation. The\nstructural economic changes in several regions indicate that\ndownstreaming has the potential to expand regional growth sources while\nopening new economic activities outside the primary sector.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/nickel-downstreaming-drives-economic-structural-changes-in-sulawesi-1790873747", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }