Bans on exports of raw mineral ores are driving an expansion of domestic processing capacity for nickel, coal and bauxite in Indonesia.
This comes as global demand for electric vehicle (EV) batteries will increase demand in Indonesia’s nickel industry – as well as demand for other minerals. Net zero modelling by IEA indicates that the annual value of Indonesia’s critical minerals production will likely exceed US$30 billion by 2030.
Increased demand and downstream processing in Indonesia will create fresh opportunities for Australian companies in the mining equipment, technology and services (METS) sector.
Indonesia is already the world’s largest producer of nickel and the second largest producer of tin.
Mining is a key contributor to Indonesia’s GDP. Since 2014, the Indonesian Government has banned exports of certain raw mineral ores to encourage onshore processing.
Bauxite is likely to be added to the export-ban list in June 2023. This should accelerate growth in bauxite processing facilities for alumina. In Indonesia, there is a close connection between export bans and downstream development, according to analysts.
There are 8 bauxite smelters under construction in Indonesia, with a further 4 planned
Processed nickel exports rose from US$1 billion in 2015 to US$30 billion in 2022. Indonesia is projected to account for half of the world’s increase in nickel production to 2025.
Production is driven by fast-growing global demand. The global electric vehicle (EV) industry, for example, is expected to become increasingly reliant on Indonesia’s vast nickel reserves.
Indonesia is seeking to become a hub for EV battery production. There are plans to build lithium refineries and facilities for anode material production.
Indonesian targets call for 695 million tonnes of coal production in 2023 and 518 million tonnes of exports. The country also aims to develop downstream activities in multiple coal-related areas, including:
The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) gives Australian businesses advantages in Indonesia. These include tariff-free access for 99% of Australian goods exports and greater certainty around investments into Indonesia.
Australian METS companies can leverage our reputation for high-quality METS products and services. Specifically, Australian METS companies are well-placed to meet growing demand for technology and services that improve productivity, efficiency and safety.
There will be more opportunities for Australian METS companies to access Indonesian projects as the country develops greater downstream refining and processing capabilities.
Australian METS companies can also help local companies meet higher ESG standards that will be a requirement to sell into global supply chains.
In September 2023, Austrade, together with state government partners, will host an Australia Pavilion at Mining Indonesia 2023. We will showcase Australian mining and METS capabilities to customers from Indonesia and across Southeast Asia. For more information, please contact Armelita Adhitya.
Austrade has a team of advisers in Indonesia who have strong networks on the ground with government, customers and stakeholders. For more information on METS opportunities in Indonesia, please contact:
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