No Raw Export, No Problem: Increased Export Sales Opportunities in Indonesia's Mining Products

President Joko Widodo reaffirmed in August this year that Indonesia will immediately close the door to export opportunities of most raw mining products. Many have expressed that this can be considered as a paradigm shift in the concept of Indonesia's foreign trade and some have shared their worries that this will reduce Indonesia’s export chances. Recently, Indonesia’s mining industry has been proving everyone wrong with these impressive new sales opportunities:

Nickel: Indonesia’s Champion

As the world’s largest nickel producer and the biggest nickel reserves, Indonesia has not exactly been reaping the full fruits of nickel’s economic opportunities. Back in 2017, Indonesia received only US$3.3 million from exporting nickel ore. After the government strictly stopped the permit of exporting nickel ore, the Ministry of Energy and Mineral Resources reported in their 2020 booklet that number has multiplied nearly 7x resulting in a US$20.9 million income from exporting nickel downstream products, such as nickel sulfate, and cathode. 

Currently, the government is also focusing on processing nickel ore into stainless steel. Once reaping the US$232 million in sales from exports last year, Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan, is now targeting a 14.22% increase in sales for the upcoming years. 

Bauxite: The High Demand Mineral

The Ministry of Energy and Mineral Resources shared that in 2021, the price of bauxite ore was at a mere US$24 - US$30/ton, which contributed to Indonesia’s state revenue of US$628 million from the total sales of 23 million tonnes of bauxite ore. To gain even more sales, the government has uncovered better selling opportunities for this high demand mineral.

Starting June 2023, the government will put a stop to the export of bauxite ore, which may have worried many stakeholders. This is to further encourage Indonesia’s mining industry to process bauxite ores into far more valuable products. By selling these ores in the form of aluminum with the current price of US$200 - US$300/ton, the ministry has estimated that state revenue from exporting processed bauxite ore commodities will  increase by eight times. 

Currently, the government has invested a total of US$11 million dollars in 12 bauxite smelters to which 8 of them are ready to process 10,5 million tonnes of ores per year. 

Coal: Ensuring Fewer Emissions

Reaching US$ 161,69 million, the value of Indonesia's coal exports to Europe in September 2022 was the highest in the last four years. Many coal mining companies have also expressed their shock of the surge in Indonesian coal exports to the European region. The Indonesian Coal Mining Association (APBI) reported that coal exports to Europe until early October 2022 had reached 3.5 - 4 million tons, a four times increase compared to the 2021, averaging only 1 million tons. This shows Indonesia’s readiness in responding to energy crisis of the world, specifically ones caused by the raging war between Russia and Ukraine. 

On top of this, eleven companies have committed and are preparing coal downstream projects that are estimated to last until 2030. The Director of Coal Development and Concession at the Ministry of Energy and Mineral Resources said that increasing added value through downstream projects is an effort to replace coal energy, which has high carbon emissions, and making it more environmentally friendly. These eleven companies will be actively processing coal into DME or dimethyl ether with an input capacity of 6 million tonnes/year and produce 1.4 million tonnes of PNT/year.

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