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Critical Minerals Industries In Indonesia: A Firm-Level Perspective

Author

Listed:
  • Donni Fajar Anugrah

    (Bank Indonesia)

  • Arnita Rishanty

    (Bank Indonesia)

  • Maxensius Tri Sambodo

    (National Research and Innovation Agency)

  • Ade Dwi Aryani

    (Bank Indonesia)

Abstract

This research provides a new perspective on developing Indonesia's critical mineral industry ecosystem from the standpoint of business practitioners and experts. Despite Indonesia's significant potential in critical mineral resources, the success of downstream development is determined by how well the upstream and downstream ecosystems can be strengthened. This includes improving raw material and material efficiency, building a strategic position in the global value chain, ensuring long-term supply sustainability, stimulating local demand, prioritizing the use of green energy, enhancing effective hazardous waste management, and addressing social issues in mining and processing areas. The analysis of Net Present Value (NPV) and Internal Rate of Return (IRR) in nickel downstream development indicates that, although substantial investment is required, a quicker return on investment can be achieved through technological changes, such as adopting pyrometallurgy. The NPV and IRR evaluation in copper downstream development demonstrates the economic feasibility of processing copper concentrate, showing significant profitability. The copper industry continues to grow with added value in the value chain, highlighting the economic benefits of copper downstream development. The prospects for downstream development of bauxite and aluminum are also promising. Based on NPV results, brownfield projects appear more economically viable than greenfield projects. Thus, the downstream development of critical minerals in Indonesia necessitates collaboration between the private sector (national and global) and the government to balance economic, social, and environmental objectives.

Suggested Citation

  • Donni Fajar Anugrah & Arnita Rishanty & Maxensius Tri Sambodo & Ade Dwi Aryani, 2023. "Critical Minerals Industries In Indonesia: A Firm-Level Perspective," Working Papers WP/06/2023, Bank Indonesia.
    • Handle: RePEc:idn:wpaper:wp062023
    as

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    References listed on IDEAS

    as
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    3. Fikru, Mahelet G. & Awuah-Offei, Kwame, 2022. "An economic framework for producing critical minerals as joint products," Resources Policy, Elsevier, vol. 77(C).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    critical minerals; downstream; firm-level; value-added;
    All these keywords.

    JEL classification:

    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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