The Institute for Development of Economics and Finance (INDEF) stated that Indonesia is in a strategic position in the global energy transition trend through the development of the copper downstream industry.
This development is believed to support low-carbon technologies while also increasing the national economic added value. INDEF's Executive Director, Esther Sri Astuti, mentioned that the copper downstream ecosystem in Indonesia has developed significantly and holds great strategic potential to meet global market demands.
One of the key developments is the presence of PT Freeport Indonesia (PTFI) with the construction of a copper smelter at the Special Economic Zone (KEK) Java Integrated Industrial and Ports Estate (JIIPE) in Gresik, East Java, with an input capacity of 1.7 million tons of copper concentrate per year. Inaugurated by President Joko Widodo on September 23, 2024, this smelter is the world's largest single-line copper refining facility, capable of producing around 600,000 to 700,000 tons of copper cathodes annually.
In addition, Indonesia also has a copper smelter and precious metals refining facility in West Sumbawa Regency, West Nusa Tenggara (NTB), under the management of PT Amman Mineral Internasional Tbk (AMMAN).
Esther explained that Indonesia currently ranks 10th globally, holding around 3% of the world's total copper reserves, equivalent to 24,000 tons. This places Indonesia on par with China and above countries such as Kazakhstan, Zambia, and Canada. Meanwhile, the remaining 22% of global reserves are spread across other countries.
"Although Indonesia is not the largest owner of copper reserves, its position is quite strategic in the global copper industry. The significant reserves provide a strong foundation for Indonesia to develop an integrated and sustainable copper industry. Indonesia's position as the 10th-largest copper reserve holder in the world highlights its significant potential in the global copper industry," said Esther.
With the increasing adoption of low-carbon technologies, global demand for copper continues to grow. The electric vehicle industry, in particular, has one of the highest demands, as this technology requires a significant amount of copper.
Moreover, the development of renewable energy sources such as solar panels and wind turbines, as well as the digitization of infrastructure, further strengthens copper's role as a strategic material.
"This trend presents a huge opportunity for Indonesia to strengthen its copper downstream sector by adding value. From processing copper ore into concentrates to producing electric cables and vehicle components, each stage contributes significantly to the national economy," Esther added.
Esther believes that Indonesia offers market certainty for long-term investment in copper downstreaming. Developing products such as electric vehicle components, energy storage systems, and smart energy infrastructure is considered strategic for strengthening national competitiveness.
Furthermore, this success is supported by government policies that create an integrated industrial ecosystem. The implementation of the Mining Law (UU Minerba) has been a major driver in forming a strong supply chain between the upstream and downstream sectors.
"Policies that support sustainability and technological innovation are key to the transformation of Indonesia's copper industry. The transformation of the copper sector through downstreaming is expected to have a significant impact, both in increasing export value and creating jobs. INDEF notes that this sector could create hundreds of thousands of new jobs and make a substantial contribution to national GDP," Esther explained.
With the growing global demand for low-carbon technology products, Indonesia also has the opportunity to become a key player in the global supply chain. This move not only strengthens the domestic economy but also positions Indonesia as a regional leader in the green technology sector.
Additionally, the Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, also praised the presence of PTFI's smelter, which has created jobs and increased state revenue.
"The jobs are permanent now. State revenue is starting to rise. Our hope is that tomorrow, national entrepreneurs who have been granted mining permits, if they don't build smelters, I will personally review it. They must be forced to build smelters," said Bahlil.
