INDEF: Midstream Sector Can Accelerate Critical Mineral Downstreaming
INDEF Green Transition Initiative Director Imaduddin Abdullah is pushing for the strengthening of the midstream sector for critical minerals. According to him, developing the midstream can be a more realistic first step compared to directly building more complex downstream industries.
This sector sits between upstream and downstream activities. Imaduddin noted that several components within the midstream sector can actually be developed by utilising already available domestic raw materials. These include aluminium frames, tempered glass, copper cables, electrical contacts, and various tin-based components needed in the clean energy supply chain.
“Medium-term priorities should focus on complex products that are still close to Indonesia’s capabilities, as they are more realistic to develop from the existing industrial base. Strengthening the midstream sector must be a priority so that more added value remains within the country,” Imaduddin said during a discussion at the Pullman Hotel, Jakarta, on Wednesday, 17 June 2026.
The 2026 INDEF GTI study shows that intervention in the form of fiscal incentives in the midstream sector can increase added value by up to 14.39 per cent and attract upstream sector growth of 14.22 per cent. Meanwhile, policies supporting workforce development in this sector have the potential to increase added value by up to 76.81 per cent and boost exports by 18.03 per cent.
Nevertheless, he cautioned that strengthening this sector also has consequences. Production subsidies in the midstream sector could potentially increase imports of raw materials from the upstream sector by up to 23.71 per cent. Therefore, such a strategy must be accompanied by strengthening domestic raw material supply and integrating the supply chain from upstream to the midstream sector.
On the other hand, Cecep Mochammad Yasin, Director of Mineral Business Development at the Directorate General of Minerals and Coal, Ministry of Energy and Mineral Resources (ESDM), stated that demand for critical minerals such as lithium, nickel, and cobalt is projected to continue rising until 2040. This increase is driven by the rapid development of renewable energy technology, electric vehicles, batteries, and modern power grids.
According to Cecep, Indonesia has large reserves of several critical minerals. However, owning natural resources alone is not enough to generate optimal economic benefits. Therefore, downstream processing is key so that mined minerals can provide greater added value for the national economy.
He cited the nickel industry value chain, which can develop from ore into mixed hydroxide precipitate (MHP), nickel matte, cathode precursors, battery cells, and finally end products. The longer the value chain built domestically, the greater the economic benefits Indonesia can enjoy.
“Mastery of mineral resources will be the main determinant of global economic competitiveness. The key going forward lies in accelerating downstream processing, cleaner technology, and responsible natural resource management,” he stated.