The Republic of Indonesia’s Support for Development of a World Class Nickel Industry

MCT Asia Trading — 18.05.2023

Producing over forty percent of the world’s nickel, the Indonesian government has over recent years implemented various measures to support the development of the nation’s nickel industry. Previously characterised by a fragmented value chain, these efforts aim to add value to Indonesia's nickel resources, promote domestic processing, attract investments, and create employment opportunities.

By Collab Media
In 2020, Indonesia banned the export of nickel ore to encourage domestic processing and value-added activities. The government aims to develop a domestic nickel industry that can produce refined nickel products and support the growing demand for batteries, particularly in the electric vehicle sector.

In line with the drive to retain as much of the value of the growing sector within the country, the government has encouraged investments in smelters and downstream processing facilities to increase the value of nickel exports by domestic processing of nickel ore into higher-value products such as nickel pig iron, ferronickel, and nickel matte. Tax breaks, land access, and simplified licensing processes for smelter projects have all played a part in attracting record levels of investment in the burgeoning downstream sector, together with import duty exemptions for machinery and equipment, accelerated depreciation, and access to financing schemes.

The Indonesian government has also actively supported the establishment of industrial parks, such as the Weda Bay Industrial Park in North Maluku, to provide infrastructure and support facilities for nickel smelters. These parks offer attractive investment conditions, including reliable electricity supply, transportation networks, and logistical support.

The government has also shown a newfound willingness to collaborate with industry stakeholders, including mining companies and associations, to create a conducive environment for the nickel industry. This collaboration involves dialogue, policy consultations, and partnerships to address challenges and promote sustainable development.

A key goal of these policies has been the development of human resources, especially in the nickel-rich provinces and islands of eastern Indonesia which historically have benefitted the least from the nation’s economic development. The Indonesian government focuses on developing a skilled workforce for the nickel industry through vocational training programs and partnerships with educational institutions to enhance the capabilities of local workers and create employment opportunities in the sector.

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