Government Develops Intermediate Mineral Industry, Regulation and Incentives Pose Challenges
Jakarta (ANTARA) – Regulatory certainty and guaranteed fiscal incentives are the primary keys for the Government in driving the development of intermediate industries and advanced materials in Indonesia.
This step is urgently needed so that the potential of national mineral downstreaming does not stop at semi-finished products, but is able to penetrate high value-added strategic manufacturing industries.
In fact, Indonesia holds an advantage upstream thanks to its abundant mineral reserves. These commodities include nickel, copper, bauxite, tin, silica, rare earth elements (REE), iron, as well as gold, silver, gallium and tantalum.
These commodities have already been processed into basic downstream products. Nickel, for instance, has produced ferronickel (FeNi), nickel pig iron (NPI), mixed hydroxide precipitate (MHP), nickel sulphate and cobalt sulphate, while copper has been processed into copper cathode, wire rod, cables, tubes and strips.
Meanwhile, bauxite has yielded alumina, aluminium ingots, billets, extrusions, plates and foil. Tin has been processed into tin ingots and solder wire, silica into silica products, and REE into magnet materials. Gold and silver are produced as electronic materials.
Bisman Bhaktiar, Executive Director of the Centre for Energy and Mining Law Studies (PUSHEP), said Indonesia has already carried out downstreaming. However, its products only reach the semi-finished stage, not final products.
“Broadly speaking, we have downstreamed today, but only to semi-finished products, not final products, so the added value is not maximal. The greatest added value lies precisely in the advanced industrial stage up to final products,” said Bisman.
The problem is that Indonesia still faces its biggest gap in intermediate industries and advanced materials, which serve as the bridge between mineral downstreaming outputs and strategic manufacturing industries. As a result, many high-technology materials must still be met through imports.
According to a report at the Danantara’s Advanced Materials Industry Dialogue 2026 forum, these materials include aluminium alloys, special steels, battery-grade aluminium foil and copper foil, silicon wafers and NdFeB permanent magnets. These materials are vital components in the electronics, energy and electric vehicle industries.
Beyond specialised materials, Indonesia is also considered still limited in producing high-value industrial components. These include chips, MOSFET and IGBT transistors, printed circuit boards (PCBs), sensors, radar, communication modules, BLDC motors, battery cells up to battery packs and battery management systems (BMS), as well as precision components for the aerospace industry.
“For the development of advanced materials, what matters is that the Government must provide legal certainty, regulatory assurance and incentives, both fiscal and non-fiscal,” Bisman explained.
Furthermore, he urged a government policy requiring every cooperation with foreign partners to include technology transfer, rather than mere capital investment. In addition, Indonesia must also develop its human resources and build a mineral-based industrial ecosystem.
Danantara Indonesia recently held Danantara’s Advanced Materials Industry Dialogue: From Minerals to Manufacturing at the Danantara Indonesia building.
The forum initiated the development of advanced materials (critical minerals downstreaming) between PT Mineral Industri Indonesia (Persero) or MIND ID, PT LEN Industri (Persero), PT Krakatau Steel (Persero) Tbk and PT Perminas (Persero).
This cooperation aims to optimise the supply-offtake of critical minerals and advanced materials for the needs of domestic strategic industries, accelerate the realisation of a large-scale national advanced materials industry through joint technology development, and drive high value-added national economic growth through strategic industrial programmes, including but not limited to national electric cars and motorcycles, aerospace, maritime, basic components, defence and electricity.