Government Develops Intermediate Mineral Industry, Regulation and Incentives Pose Challenges

Jakarta (ANTARA) - Regulatory certainty and guaranteed fiscal incentives are key for the government to encourage the development of intermediate and advanced materials industries in Indonesia. This step is urgently needed so that the potential of national mineral downstreaming does not stop at semi-finished products, but can penetrate high value-added strategic manufacturing industries. Indonesia actually has an upstream advantage 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 various commodities have currently been processed into basic downstream products. For nickel, for example, this 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 produced alumina, aluminium ingots, billets, extrusions, plates, and foil. Tin has been processed into tin ingots and solder wire, while silica produces silica and REE into magnetic materials. Gold and silver are also produced for electronic materials. Executive Director of the Centre for Energy and Mining Law Studies (PUSHEP) Bisman Bhaktiar said that Indonesia is already carrying out downstreaming. However, the products are only semi-finished or not yet final products. “Generally, we have already carried out downstreaming, but only up to semi-finished products or not yet final products, so the added value is not maximised. Because the greatest added value actually lies in the advanced industry stages and up to the final product,” Bisman stated. The problem is that Indonesia still faces a significant gap in the intermediate and advanced materials industries, which serve as a link between mineral downstreaming results and strategic manufacturing industries. As a result, many high-tech materials still have to be met through imports. According to a report at the Danantara’s Advanced Materials Industry Dialogue 2026 forum, these materials include, among others, aluminium alloy, special steel, battery-grade aluminium foil and copper foil, silicon wafers, and NdFeB permanent magnets. These materials are important components in the electronics, energy, and electric vehicle industries. In addition to special materials, Indonesia is also considered to still have limitations in producing high-value industrial components. These components include chips, MOSFET and IGBT transistors, printed circuit boards (PCB), sensors, radar, communication modules, BLDC motors, battery cells to battery packs and battery management systems (BMS), as well as precision components for the aerospace industry. “For the development of advanced materials, it is important for the government to provide legal guarantees, regulatory certainty, and incentives, both fiscal and non-fiscal,” Bisman explained. Furthermore, he encouraged a policy that any cooperation with foreign parties must include technology transfer, rather than just capital investment. In addition, Indonesia must also boost human resources and build a mineral-based industrial ecosystem. Danantara Indonesia recently held the Danantara’s Advanced Materials Industry Dialogue: From Minerals to Manufacturing at Wisma Danantara Indonesia. This forum was an initiation for 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 collaboration aims to optimise the supply-offtake of critical minerals and advanced materials for domestic strategic industry needs, accelerate the realisation of a large-scale national advanced materials industry through joint technology development, and encourage high value-added national economic growth through strategic industrial programmes such as, but not limited to, national electric cars and motorcycles, aerospace, maritime, basic components, and defence and electricity.