Natural Resources Downstreaming to Solve Indonesia’s Unstable Economy
BANDUNG, itb.ac.id – The world's economy is currently in turmoil. To recover and rise, investment can be the main key. Besides, Indonesia is currently implementing a natural resources downstreaming policy to improve its economy. Those two things are the main topic of a Guest Lecture that was titled "Economy Transformation through Downstreaming with Local Wisdom", that was held on Wednesday (5/10/2022).
This Guest Lecture was presented by the Freeport Chief Executive Officer, McMoran Richard C. Adkerson, and the Minister of Investment and the Head of Capital Investment Coordinating Institution (BPKM), Bahlil Lahadalia. The Guest Lecture was held on-site at the Institut Teknologi Bandung (ITB) West Hall.
ITB became the fourth campus that organized a scientific oration with McMoran and Bahlil as the speaker, and the seventh National University in Indonesia that was visited. This event was also broadcasted via the Institut Teknologi Bandung YouTube Channel.
Bahlil said that various global events that recently happened can threaten Indonesia's economy. To prepare Indonesia's economy for future challenges, Investment can be the solution for economic recovery. Since 2020, Bahlil has implemented raw natural resources export ban. The Downtsreaming of natural resources policy was created in order to provide added value for our natural resources.
A concrete step to ban the export of raw natural resources such as nickel, tin, and copper was taken. The flows of those resources are being diverted for Indonesia's homegrown electric vehicle battery manufacturing. This brings positive effects where our nickel export value actually increases from US$ 3.3 billion in 2017 to US$ 20.9 billion in 2021.
Regarding this downstreaming policy that was proposed by President Joko Widodo, McMoran said that PT. Freeport Indonesia (PTFI) is committed to supporting this policy with the construction of a single line smelter at the Java Integrated Industrial and Port Estate (JIIPE), Gresik. The construction of this project has reached 40% and will fully operate in 2024.
More astoundingly, currently, 51,2% of the Freeport Indonesia shares are owned by the Indonesian Government and the rest by Freeport McMoran. With the current share, PTFI is more eager to engage in long-term investments such as capital investment and social investment. The size of capital that will be invested between 2021 and 2041 amounted to US$ 18.6 billion with the predicted direct future benefit (2021-2041) reaching US$ 80 billion.
Future social investment (2021-2041) of PFTI has amounted to US$ 100 billion. Some of its plans are 10000-hectare mangrove forest reclamation on a new tailing sedimented area and Jayapura Watershed area rehabilitation with an area of 4234 hectares. PTFI is also committed to reducing its greenhouse gas emission by 30% by the year 2030 (currently reaching 22% greenhouse gas emission reduction).
This downstreaming effort has faced some protests from other countries. Therefore a downstreaming industry collaboration with domestic corporations in various regions is urgently needed to ensure that the objective of this downstreaming can be achieved equally and to create an Indonesian Centric. This can also improve the national natural resources management and enable us to produce higher-value products.
Reporter: Pravito Septadenova Dwi Ananta (Geological Engineering, 2019)
Translator: Favian Aldilla R (Civil Engineering, 2019)
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