Nickel Downstreaming Supports Economic Nationalism and Local Communities
In many developing nations, economic nationalism often arises from a long history of exploitation and being forced to serve as raw material suppliers for foreign industries. Indonesia experienced this phase for decades, where mineral wealth was exported in its raw form, leaving the added value, technology, and significant employment opportunities to flourish abroad.
“That is why downstreaming was introduced not merely as an industrial policy, but as a symbol of national pride. In the nickel sector, that spirit is very strong,” said Ihwan Kadir, founder of the Poros Musyawarah Masyarakat Blok Lapaopao (Pormmal).
The government has been pushing for smelter development, restricting raw material exports, and shifting the industrial direction so that Indonesia is no longer just a spectator in its own land. The overarching narrative is that sovereignty over natural resources must return to the hands of the nation.
However, amidst this enthusiasm, troubling questions are emerging on the ground. There are concerns regarding whether this proclaimed nationalism is being fully felt by the national industry and the communities living around mining areas. When global nickel prices weaken and demand decreases, the impact extends beyond economic reports or international trade graphs; it reaches small eateries, local contractors, hauling drivers, daily traders, and the families of mining workers.
In North Morowali, for instance, the slowdown in the smelter industry has begun to affect the economic activities of surrounding communities. Kiosks are losing customers due to decreased contractor activity, and fears of layoffs are growing. In Kolaka, Southeast Sulawesi, indigenous communities have even staged protests because the cessation of mining activities has paralysed the local economy. This phenomenon demonstrates that the nickel industry is no as much about large-scale investment and mineral exports as it is about the foundation of social life in many regions.
When industrial activity slows, the effects are immediately felt in daily life: vehicle loan payments are at risk of stalling, the cost of children’s education becomes a heavier burden, restaurants lose patrons, and village economies gradually lose their driving energy.
“The government certainly faces difficult challenges. On one hand, national production must be maintained to prevent global nickel prices from falling too deeply. On the other hand, industrial sustainability and the protection of labour are urgent needs,” Kadir added.
The issue is that communities often feel the social impacts of these policies are not fully accounted for in the grand calculations of national industrial development. In this context, attention is turning towards the position of national companies attempting to survive amidst the dominance of global capital. One such example is the Ceria Group through its Merah Putih Smelter project in Kolaka. This company is viewed as a representation of domestic investment attempting to stand firm amidst increasingly complex nickel industry competition, holding status as a Domestic Private Investment (PMDN), a National Strategic Project, and a National Vital Object.
This is where the debate on economic nationalism becomes particularly pertinent. Economic nationalism requires more than just banning raw material exports or building processing facilities; it also demands genuine support for the ability of national industries to survive and grow.