Researcher at the Center of Reform on Economics (CORE) Indonesia, Yusuf Rendy Manilet, said that Indonesia’s nickel downstreaming policy is beginning to change the country’s economic structure by increasing the added value of commodities, state revenues, and the development of domestic processing industries. This is reflected, among other things, in the increase in exports of nickel and nickel-based products, as well as non-tax state revenue (PNBP) from the commodity.

“This is the foundation of industrialization, but it is not yet the end goal,” Yusuf said in a written statement, as quoted on Monday, October 5, 2026.

In the first half of 2026, exports of nickel and nickel-based products increased by 69.3 percent to US$6.54 billion, or approximately Rp117.05 trillion, compared with the same period the previous year.

In line with this increase, non-tax state revenue (PNBP) from nickel reached Rp21 trillion as of August 31, 2026, up from Rp10 trillion during the same period the previous year.

The Ministry of Energy and Mineral Resources (ESDM) had previously recorded total PNBP from the mineral and coal subsector at Rp108 trillion as of August 31, 2026. Nickel ore production as of September 1, 2026, was recorded at 173.79 million tons.

He said these developments demonstrate that downstreaming has created added value for Indonesia’s economy. However, most processing activities still produce intermediate products, such as nickel pig iron (NPI) and ferronickel, which are used in the stainless steel industry.

Therefore, he believes the domestic production chain needs to be extended so that the economic benefits generated become greater while involving more national suppliers.

“The next stage is to extend the production chain to precursors, cathodes, battery cells, and final manufacturing, involving more domestic suppliers,” he said.

One example of downstreaming development is being carried out by PT Vale Indonesia Tbk, a member of Indonesia’s mining industry holding company MIND ID, through projects in Pomalaa, Morowali, and Sorowako. MIND ID is Vale’s largest shareholder, with an ownership stake of approximately 34 percent.

Vale is developing facilities using High Pressure Acid Leach (HPAL) technology to process limonite ore into mixed hydroxide precipitate (MHP), one of the intermediate materials in the electric vehicle battery production chain.

The three downstreaming projects have a combined production capacity of approximately 240,000 tons of MHP per year, while Vale said its strategic investment program in Indonesia amounts to approximately US$7.2 billion, or Rp128.87 trillion.

In Pomalaa, Southeast Sulawesi, the HPAL project is being developed through PT Kolaka Nickel Indonesia together with Zhejiang Huayou Cobalt and Ford Motor Co., with an investment of approximately US$4.5 billion, or Rp80.54 trillion. The project has an annual production capacity equivalent to approximately 120,000 tons of nickel and 15,000 tons of cobalt contained in MHP.

Meanwhile, the development of Vale’s integrated smelters in Bahodopi, Central Sulawesi, and Pomalaa, Southeast Sulawesi, is listed as a National Strategic Project (PSN).

Yusuf said HPAL-based projects offer a different downstreaming pathway compared with nickel processing for the stainless steel industry.

“In addition to expanding the utilization of resources, these projects also provide access to a more diverse global supply chain. However, MHP remains an intermediate product,” he said.

He said the impact on industrialization would become greater if MHP could be further processed in Indonesia into precursors, cathodes, and eventually battery cells.

The strengthening of the processing industry is also reflected in its export value, which reached US$159.55 billion, or approximately Rp2,855 trillion, from January to August 2026, representing annual growth of 7.87 percent. During the same period, Indonesia’s total exports reached US$193.64 billion, or approximately Rp3,466 trillion, an increase of 4.74 percent year-on-year.

“Deepening the value chain and increasing local economic participation can enable the benefits of downstreaming to extend beyond simply increasing export value. Downstreaming can become the foundation of national industrialization if it succeeds in extending the production chain, increasing domestic added value, strengthening the involvement of domestic industries, and expanding economic contributions in operational areas,” he concluded.