Sustainability
extraction of mined ores. “Pressure is also critically needed for stainless steel products and their derivatives,” he said.
Limiting expansion
Adhiguna believes restricting the industry’s expansion is a viable solution to address environmental impacts, preserve reserves and rectify the plummeting nickel prices in the market.
The decline in nickel prices debunks the government’s argument that nickel exploitation aims to improve the welfare of the people. Massive nickel mining since 2013 has led to an oversupply, causing prices to drop significantly from a decade ago. Again, Adhiguna recommended that expansion restrictions start in the downstream sector or smelters. Nickel ore production is affected by the demand for processing facilities and limiting the number of smelters would gradually improve nickel ore prices. “The faster the growth of smelters, the more ore mining and deforestation will inevitably follow. Adding one smelter means increasing the growth rate for deforestation,” he elaborates.
Strengthening exploration and nickel reserve data
The Indonesian Nickel Miners Association (APNI) stated earlier this year that Indonesia’s high-grade nickel ore reserves, mainly used for steel production, would be depleted within six years. Although the government has refuted APNI’s statement, it underscores that Indonesia’s nickel is finite. “Check Indonesia’s nickel reserves accurately. Are there new explorations? Are new mining locations in protected forest areas?” asks Gupta.
Gani also emphasised the importance of reducing environmental impacts starting from the exploration stage of mining. Exploration that considers environmental impacts can lead to mine designs that minimise deforestation and other environmental risks.
Evaluating export bans, strengthening cooperation The economic sustainability of the nickel industry extends beyond production activities. Market conditions and the economic value of nickel must also be carefully considered. Without adequate profits, the transition to sustainability seems distant. To attain economic viability, Gupta argued that the Indonesian government needed to evaluate whether tax holidays and the obligation for smelter operators to utilise local products truly promote business sustainability. He noted how, amid these demands, the government had paradoxically provided tax incentives for non-nickel electric vehicles. According to Gupta, this evaluation should also be accompanied by a comprehensive comparative study to determine whether the benefits of incentive
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policies for smelters outweigh the benefits of exporting nickel ore.
“It could turn out that this is more detrimental than just exporting raw nickel. Given the unclear trajectory towards EV (with nickel batteries), it’s worth considering whether these incentives are sustainable,” he adds.
Gupta also recommended that the government strengthen international nickel supply chain cooperation rather than impose export bans, which do not always benefit Indonesia. Almost 90% of Indonesia’s nickel export is shipped to China. “Investment related to nickel downstreaming in Indonesia could be more competitive and coveted by companies from various countries instead of just a few,” Gupta suggests, adding the importance of working with multilateral organisation such as the OECD.
Drafting a comprehensive roadmap Both Gupta and Adhiguna question how far Indonesia can realistically go in implementing nickel downstreaming. With China currently experiencing an oversupply of electric batteries, Adhiguna reiterated how important it was for Indonesia to have a far- reaching roadmap for its nickel ambition. Meanwhile, Gupta believes Indonesia needs to reassess how far investor interest in developing nickel downstreaming extends. “If it doesn’t reach cars, maybe motorcycles are okay. If it reaches batteries, well, that’s something. Or even if we can only go for stainless steel, that’s not bad either,” he says. Echoing this sentiment, Gani also believes it’s time for the government to explore other nickel products that could provide added value – not just for batteries. After all, nickel is widely used in everyday life, from kitchen utensils and electronic equipment to supporting various industrial sectors.
Sustainable mining practices By integrating the aspects mentioned above, according to Gani, it’s time for sustainable mining practices to serve more than just a slogan, applied with tightened oversight from the government.
Indonesia could emulate countries that have successfully implemented sustainable practices, such as Canada with its biomass-powered mining energy sources.
He added that companies could also show their commitment by purchasing International Renewable Energy Certificates, demonstrating how much of their electricity comes from renewable energy. “Besides being a material that can help advance renewable energy in Indonesia, it would also be beneficial for the nickel industry to refer to sustainable mining practices in its exploration, exploitation and theory processes,” Gani concludes. ●
This article is republished from The Conversation. 29
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