Pursuing Value-Added Industry Development, Coordinating Minister Airlangga: Government Encourages Mutually Beneficial Partnership

JAKARTA - The government continues to encourage the downstream industry program by reducing exports of raw materials, in order to increase added value in the industrial sector and the competitiveness of the national economy. Through the downstream program, the use of technology transfer becomes important in utilizing the results of natural resources and protecting the environment.

"I have repeatedly said to stop exporting nickel. Next year we will stop bauxite raw materials, next year we will stop exporting other mineral and coal. We will stop exporting raw materials that do not bring great added value to the country," said Indonesian President Joko Widodo at the Factory Review event. Ferronickel and Stainless Steel and the inauguration of PT Gunbuster Nickel Industry in Konawe Regency, Southeast Sulawesi, Monday, December 27.

President Joko Widodo supports if there are investors who want to build a bauxite downstream industry in the next year. The President also appealed to Regional Governments to always maintain the investment climate in their respective regions, so that it is conducive for investors who want to develop value-added industries. From these industries, they will get taxes, create as many jobs as possible, and earn a lot of foreign exchange.

"Provide security for investors to carry out their business activities, so that they can increase the value of their investments in the future. The benefits for the surrounding community are that it will open up new jobs and opportunities for MSMEs, which in turn will increase economic growth in the province and district where the industry is located," said President Joko Widodo.

Indonesia has the number 1 nickel reserve in the world which reaches 21 million tons or 24 percent of the world's total reserves. Indonesia's nickel production in 2020 will reach 781 thousand tons or 31.8 percent of world nickel production. Going forward, nickel production is expected to continue to increase, both for nickel pig iron production and high-pressure-acid-leach processing from low grade ore.

The increase in added value from nickel ore to ferronickel products is 14 times, and if it becomes stainless steel billets it will be 19 times. Currently, nickel smelters in operation have reached an investment of USD 15.7 billion, with a ferronickel production capacity of 969 thousand tons/year.

Exports of ferronickel products have also increased very rapidly from year to year, where in 2020 it reached USD 4.7 billion, and in the period January to October 2021, it was recorded to reach USD 5.6 billion.

Based on World Top Export data, currently exports of nickel-based products (stainless steel slab, stainless billet and stainless steel coil) Indonesia ranks 1st in the world with total exports worth 1.63 billion US dollars in 2020 and is ranked 4th in world production.

"A mutually beneficial partnership between industry and the community will bring mutual progress and have a direct impact on industrial growth, employment, improving community welfare through entrepreneurship, as well as improving community social infrastructure," said Coordinating Minister for the Economy Airlangga Hartarto in his report to President Joko Widodo.

PT Gunbuster Nickel Industry which was inaugurated today is a smelter industry located in North Morowali Regency and is expected to produce ferronickel with a production capacity of 1.8 million tons/year. With the addition of investment in PT Gunbuster Nickel Industry, the mineral downstream program based on natural resources will be achieved more quickly.

This completes the production line previously carried out at the PT Obsidian Stainless Steel Konawe smelter, Southeast Sulawesi. The company is a smelter producing ferronickel with a production capacity of 2.2 million tons/year and stainless steel billets with a production capacity of 3 million tons/year. Meanwhile, PT Virtue Dragon Nickel Industry is a ferronickel-producing smelter with a production capacity of 1 million tons/year.

The three smelter companies will be part of the Government's plan to encourage industrial downstream to increase the added value of domestic mineral raw materials. PT Obsidian Stainless Steel, PT Virtue Dragon Nickel Industry, and PT Gunbuster Nickel Industry, have invested a total of US$8 billion, with a workforce of approximately 27 thousand people.

Also attending the event were the Minister of Industry, Minister of Investment/Head of Capital Investment Coordinating Board (BKPM), Cabinet Secretary, Chief of the Indonesian National Police, Governor of Southeast Sulawesi, Governor of Central Sulawesi, Regent of Konawe, Regent of North Morowali, Board of Commissioners of PT Gunbuster Nickel Industry, President Director of PT Gunbuster Nickel Industry, and President Director of PT Virtue Dragon Nickel Industry.