Mineral Patokan Price Policy Directs Orientation Business Actors In Downstreaming

Illustration - Residents stand around industrial areas in Cilegon City, Banten. (Photo: Doc. ANTARA)

Energy economy observer from Gadjah Mada University (UGM) Fahmi Yahki assessed that the Mineral Patokan Price (HPM) policy is a fiscal instrument that can direct the behavior of business actors to be downstream oriented.

"So far, the export of raw materials is more profitable, because the margin is high and the process is fast. With HPM and export bans, the government has created a disincentive so that business actors want to invest in smelters," said Fahmi as quoted by ANTARA, Wednesday, May 7.

The statement is related to HPM policies and the ban on the export of bauxite ore. This policy is considered to be part of a large strategy to increase the added value of minerals or downstream in the country.

"The ban on exports and HPM is part of increasing added value of minerals. This is a constitutional mandate, and not a sudden policy. Precisely since it was implemented, we have seen the growth of investment in new smelters," said Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources Tri Winarno.

Tri said HPM is aimed at creating an independent national mineral processing industry, as well as global competitiveness.

Indonesia needs to strengthen the processing of domestic minerals, so that more mineral products can support the growth of the natural resource-based manufacturing industry in the future.

Tri highlighted the Smelter Grade Alumina Refinery (SGAR) in West Kalimantan as a real example of successful downstreaming.

This project is managed by PT Borneo Alumina Indonesia (BAI), a subsidiary of PT Indonesia Asahan Aluminum (Inalum) and PT Aneka Tambang Tbk (Antam).

After the ban on the export of bauxite ore was imposed in June 2023, the SGAR project was accelerated, now SGAR has been operating and has successfully made its first shipment to Kuala Tanjung Inalum.