Indonesia is an archipelagic country with huge prospects for natural resources. Its geographical location also makes it strategic to act as a center for huge business opportunities. Indonesia has a large variety of mineral deposits which accounts for roughly one-tenth of the country’s GDP. They contribute significantly to the economy and the country is one of the world’s largest producers of nickel.
Indonesia’s production of nickel amounted to an estimated 1.6 million metric tons in 2022, which turned out to be the biggest nickel production in the Southeast Asian nation and in the world.
The aforementioned opportunities for nickel in Indonesia simultaneously affect the performance of international and local mining industries operating in Indonesia, with that, what are the opportunities for the mining industry in Indonesia? How is the Indonesian government supporting the growth of these resources? What are some international companies that have an interest in Indonesia’s natural resources and mining operations? Read more to find out!
Market Overview of the Indonesian Mining Industry
The mining sector is one of the sectors that bring great potential for Indonesia’s economic growth. It is growing rapidly and has great prospects for future investments. The mining sector itself makes huge contributions to Indonesia’s GDP, exports, employment, government revenue, and most importantly the development of its many remote regions.
When uncovering the potential of mineral resources found in mining, it would be safe to assume that nickel stays dominant compared to other minerals. With the great potential of nickel, the development of batteries s also simultaneously in demand. Based on the public exposure of Merdeka Battery Materials, energy transition is driving a high battery demand. So global electronic vehicle demands are constantly being revived upwards and have seen a growth of 20% over the period of 2023 – 2030. With that, the demand is largely driven by the penetration rates of electric vehicles in China and Europe, respectively amounting to 57% and 46%.
Government Support on Nickel Mining
The government’s industrial downstream policy is expected to strengthen the competitiveness of the national economy in facing the challenges of uncertainty in the current global economic conditions. Indonesia is also eager to become an international key player in the commodity-based downstream industry by reducing exports of raw materials and increasing the downstream of natural resources-based industries in the country. In the public offering event of Merdeka Battery Materials Tbk, it was mentioned “Indonesia is ready to usher in the age of EV as mandated by President Joko Widodo in Presidential Regulation Number 55 of 2019 on Acceleration Program for Battery-powered Electric Vehicle for Road Transportation”.
Aside from integrated policies that the government had implemented for further development of raw materials and nickels, CNN Indonesia stated that the Ministry of Energy and Mineral Resources had announced a target to supply new electric motors and conversions of 300 thousand units in 2023 and 600 thousand units in 2024. Obviously, the need for converting into renewable energy will automatically affect the development of mining industries as it will require nickel to supply for the realization of this target.
International Companies Lurking onto Indonesia’s Nickel
Quoted from CNN Indonesia, the Coordinating Ministry for Maritime Affairs and Investment has targeted Tesla to invest in Indonesia. Negotiations with Tesla are still ongoing and lobbying was running positively. The key to downstream nickel is to attract world electric car manufacturers to incest.
Tesla isn’t the only company that laid interest in Indonesia’s nickel resources. Quoting to Reuters, Indonesia has signed more than a dozen deals worth more than USD 15 billion for battery materials and electric vehicle production with global manufacturers including Hyundai, LG, and Foxconn.
In summary, companies like BASF, LG Energy Solution, Hyundai Motor Group, Foxconn, Zhejiang Huayou Cobalt, Tsingshan Holding Group, and others have signed a variety of Memorandum of Understanding and Indonesia established the Indonesia Battery Corporation, which is a joint venture of state-owned enterprises to cooperate with foreign investors in developing an EV battery supply chain.
Indonesia’s successful nickel policy is likely to encourage the government to continue pushing in-country production further downstream, which will support the growth of local players of mining in Indonesia.
Not only focusing on mining, but local players like PT Merdeka Battery Materials have also contributed significantly to Indonesia’s infrastructure, especially in remote areas. With a huge emphasis on their Corporate Social Responsibility on the Environment, Social, and Governance (ESG) aspects, further investments in the mining industry, specifically towards nickel, will be advantageous to the prosperity of Indonesian citizens in rural areas in the future.
A challenge foreign investors may face is the requirement for foreign firms to have a local presence through a local representative, especially when dealing with state-owned enterprises. With that, BRIGHT Indonesia may be the best solution for you.
Enter Indonesia’s Nickel Mining Industry with BRIGHT Indonesia
It would take a lot of in-depth research about Indonesia’s nickel mining industry. In order to enter the Indonesian market, you would need the right local partner to assist you.
BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.
BRIGHT Indonesia provides services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:
- Provide assistance for you in expanding and developing your business by identification of potential partners.
- Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arranging business meetings, and acting as a liaison.
- Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
- Link client companies from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.
For more information, email email@example.com.