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INDEF: Indonesia’s downstream copper ecosystem shows positive developments
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T
he latest study by the Institute for Development of Economics and Finance (INDEF) has revealed positive developments in Indonesia’s downstream copper ecosystem.
"Indonesia has a strategic position on the global copper map, with ownership of around 3 percent of the world's copper reserves. This positions Indonesia as the country with the 10th-largest copper reserves in the world and the largest copper producer in Southeast Asia," said INDEF executive director Esther Sri Astuti.
The study attributes this strengthened position to the global trend to the green transition. Global copper consumption is projected to continue to increase until 2035 at an average growth rate of 14 percent since 2016, mainly driven by the development of the electric vehicle industry and environmentally friendly technology.
"Copper downstreaming has significant strategic value. The increase in added value from upstream to downstream is very substantial, starting from the processing of copper ore into concentrate, which has increased twofold, to the final product in the form of electric cables, which can reach 71 times the added value," Esther said.
From an economic perspective, the development of the copper downstream industry has the potential to make a major impact, from an export value of US$282 million to the creation of 253,583 jobs with a contribution of $34.9 million to GDP.
Ridwan Djamaluddin, minerals and coal director general at the Energy and Mineral Resources Ministry, emphasized that copper downstreaming must provide benefits to the country, mandated in Law No. 3/2020 concerning Mineral and Coal Mining.
The INDEF study also showed that the country’s budding downstream copper ecosystem is starting to flourish, especially after the implementation of the Coal and Mineral Mining Law. This can be seen in the formation of a value chain involving various key actors, from upstream producers to downstream players, including the wire and cable industry.
Among the government’s strategic steps is the development of a new smelter in Gresik, East Java, through PT Freeport Indonesia (PTFI), which was inaugurated by then-president Joko “Jokowi” Widodo on Sept. 23, 2024. It is the largest single-train copper refinery in the world, capable of processing 1.7 million tonnes of copper concentrate per year into 600,000 tonnes of copper cathodes.
Along with Indonesia’s increasing copper processing capacity, the Rp 58 trillion investment opens opportunities for domestic industrial growth. The smelter is estimated to absorb around 2,000 workers.
