Indonesia’s Nickel Downstreaming: A New Era with Prabowo

The departure of Luhut Panjaitan, Indonesia's Coordinating Minister for Maritime Affairs and Investment, marks the end of an era for the country's nickel downstreaming policy. Panjaitan, widely known as the "fixer-in-chief," championed the policy that has transformed Indonesia into a dominant force in the nickel market. As Prabowo Subianto takes the helm, the future of this critical policy remains uncertain.

Panjaitan's move to ban raw nickel ore exports in 2020 was a radical step that brought billions of dollars of investment into Indonesian processing. However, the environmental and human costs have been steep, particularly for islands like Sulawesi. The new administration must address these challenges while maintaining the economic benefits of downstreaming.

Prabowo Subianto has expressed his commitment to continuing the downstreaming campaign, but his administration may face obstacles in maintaining the momentum. The new president has commissioned McKinsey & Co. to provide a downstreaming review, indicating a potential reassessment of the policy. The ban on bauxite exports, which was implemented before enough refineries were built, has already sparked controversy and may be challenged.

To ensure the success of the nickel downstreaming policy, Prabowo's administration should focus on several key areas. First, the new government must find a suitable successor to Panjaitan, who played a critical role in navigating the complexities of the policy. Second, the administration should work to mitigate the environmental and human costs of downstreaming, such as by implementing stricter environmental regulations and ensuring fair labor practices.

Additionally, Prabowo's administration should explore strategic partnerships to attract more foreign investment in downstreaming industries. By leveraging Indonesia's vast nickel reserves and established processing infrastructure, the country can become a global hub for electric vehicle (EV) battery production and other downstream industries.

In conclusion, the departure of Luhut Panjaitan leaves a significant void in Indonesia's nickel downstreaming policy. As Prabowo Subianto takes office, his administration must address the challenges and opportunities presented by this critical policy. By finding a suitable successor to Panjaitan, mitigating environmental and human costs, and forging strategic partnerships, Prabowo's administration can ensure the continued success of Indonesia's nickel downstreaming efforts.