Indonesia’s Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, has reiterated the country’s vision for advancing its mining sector to strengthen Indonesia’s energy resilience. According to Minister Bahlil, Indonesia holds significant natural resource potential, particularly in nickel, with reserves accounting for 40–45% of the world’s total nickel supply.
In 2022, the U.S. Geological Survey reported that Indonesia’s nickel reserves made up 22–23% of global reserves. However, by the end of 2023, this figure was revised, positioning Indonesia as holding 40–45% of the world’s nickel reserves, cementing its status as a leading global nickel reserve holder.
In addition to nickel, Indonesia also boasts abundant reserves of tin, coal, bauxite, and quartz sand. Quartz sand, in particular, has emerged as a critical commodity, being a raw material for solar panels. The country’s global rankings in key minerals and coal are as follows:
- Nickel: 1st in the world (42% of global reserves)
- Bauxite: 4th in the world (9.8%)
- Copper: 9th in the world (2%)
- Gold: 4th in the world (5.8%)
- Tin: 1st in the world (34.47%)
- Coal: 6th in the world (3%)
Business stakeholders have increasingly considered the future of fossil energy, given the global shift toward green energy and sustainable industries. Indonesia has committed to reducing greenhouse gas (GHG) emissions. However, Minister Bahlil emphasized the importance of balancing economic conditions and affordable technology before fully transitioning.
On coal, Minister Bahlil stated that it remains one of the most cost-effective and competitive energy sources. As long as coal production contributes positively to state revenue and regional economic growth, it will continue to play a vital role alongside efforts to expand renewable energy utilization.
The Minister also encouraged smelter industries to adopt mixed fuel sources, combining gas and coal. While products manufactured using renewable energy (RE) are likely to be priced higher than those using fossil fuels, the choice of energy sources remains at the discretion of businesses. Bahlil underlined that down-streaming must become a priority to create added value for Indonesia.
Achieving energy sovereignty requires more than reliance on fossil fuels; it necessitates a shift toward fuel blending. The government is pushing for mandatory biodiesel use, starting with a 40% blend (B40) from January 1, 2025, with plans to increase to a 50% blend (B50). The ultimate goal is to reduce diesel imports entirely.
President Prabowo Subianto has directed efforts to achieve a 100% biofuel blend (B100) to fully meet domestic demand. Whether for diesel or gasoline, biofuel will play a pivotal role in Indonesia’s energy transition.
To demonstrate its strong commitment, President Prabowo has formed the Down-streaming Task Force, specifically targeting the energy and mineral resources sector. The government views down-streaming as a catalyst for achieving economic growth of over 8%.
A comprehensive Industrial Down-streaming Roadmap has been developed, covering 28 downstream commodities. Of the total USD 618 billion in planned investments, 91% falls under the Ministry of Energy and Mineral Resources. The task force, led by the Minister of Energy and Mineral Resources, aims to expedite permits and enhance the added value of commodities.
This initiative is expected to generate quality jobs, boost economic growth, and increase Indonesia’s global competitiveness. The task force will maintain flexibility to accommodate business needs while adhering to existing regulations to address industry concerns effectively.
If you have further inquiries about this topic, Schinder Law Firm is here to assist. As one of Indonesia’s leading corporate law firms, we have extensive experience handling energy, mining, and resource-related matters. Our team of highly skilled corporate and civil lawyers is ready to provide expert advice and tailored consultation. Please contact us at info@schinderlawfirm.com for more information.
Author:
Dewi Susanti