Indonesia Urged to Focus on Critical Mineral Value Chains to Capture Global Market
Jakarta (ANTARA) - Trimegah Sekuritas Indonesia chief economist Fakhrul Fulvian believes Indonesia needs to focus on developing the value chain of certain critical minerals to capture global market opportunities, particularly from the United States.
According to him, Indonesia’s strength lies in minerals such as nickel, tin and copper, which continue to grow, as well as cobalt as a product associated with laterite nickel processing. These minerals play a role in various industries, ranging from electrification, power grids, batteries and electronics to high-tech manufacturing.
“Indonesia does not need to possess all the world’s critical minerals to be relevant. We need to focus on minerals that are indeed our strengths and make Indonesia’s position in their value chains increasingly difficult to replace,” said Fakhrul in his statement in Jakarta on Monday.
He views this approach as more important than simply increasing the number of minerals categorised as strategic.
“Having strategic minerals does not automatically make a country strategic. What matters is how far those minerals can be translated into industrial capacity, technology, jobs and economic bargaining power,” he said.
According to Fakhrul, the strengthening of critical mineral supply chains by the US signals an important shift in global economic policy. The US government is preparing around US$3 billion to finance mining and processing projects for critical minerals and battery raw materials to strengthen the defence industry supply chain.
This situation presents an opportunity for Indonesia while also raising the standard for successful downstreaming. Indonesia needs to move beyond merely processing minerals before export towards developing deeper value chains, from refining, advanced materials and components to manufacturing and technology.
To that end, Fakhrul believes there are several things Indonesia needs to strengthen.
First, regulatory certainty and consistency must become a competitive advantage, especially in licensing, production and work plans and budgets (RKAB). According to him, mining investment and its downstream industries require policy certainty because they have long time horizons.
“Indonesia already has geological certainty. Now we must turn regulatory certainty into a competitive advantage,” said Fakhrul.
Second, the government needs to maintain a balance between state revenue, industrial development, environmental sustainability and investment attractiveness. Various instruments such as royalties, non-tax state revenue (PNBP), export proceeds (DHE) and domestic obligations need to be viewed as a single ecosystem so that the cost of doing business remains competitive.
“We do not have to choose between state revenue and investment. Good policy increases investment, deepens industry, and ultimately enlarges the state revenue base,” he explained.
Third, Indonesia needs to extend the domestic value chain for minerals that are indeed national strengths. Nickel can be developed further into advanced materials and downstream industries, while copper and tin can be directed towards electrification needs, power grids, electronics and high value-added manufacturing.
“The greatest value of a mineral is not always where it is dug up. The greatest value emerges when minerals meet knowledge, engineering, technology and manufacturing,” he said.
Therefore, foreign investment cannot be judged solely by the size of capital entering the country, but also by the new economic capabilities it creates.
“We do not only need investment that adds capacity. We need investment that adds capability,” Fakhrul added.