China imported 3,393,251,356 kilograms of nickel ore from Indonesia in 2020. This figure was down to 839,161,249 kg in 2021 but went back up to 1,085,675,336 kg in 2022 (see Figure 3). KPK later found differences in the export value: Rp8.6 trillion in 2020, Rp2.7 trillion in 2021, and Rp3.1 trillion in the January-June 2022 period.
Thus, the total difference was more than Rp14.5 trillion or the equivalent of 5.3 million tons of nickel ore. (FIGURE-4)
Origin: Sulawesi and Maluku
Indonesia is known as the number one nickel-producing country, and the country with the largest nickel reserves in the world. According to data from the ESDM Ministry, 90 percent of Indonesia’s nickel reserves are found in Central Sulawesi, South Sulawesi, Southeast Sulawesi and North Maluku. Based on 2020 figure, the potential volume of nickel reserves reaches 2.6 billion tons on Sulawesi Island, 1.4 billion tons in Maluku and 60 million tons in Papua (see FIGURE 5).
With the abundant nickel reserves from these three islands, the government projects that Indonesia may become a developed and prosperous country. Through the downstreaming policy, the government aims to make Indonesia a major producer of electric vehicle (EV) batteries. Global demand for nickel is predicted to exceed 4 million tons by 2040, where 1.9 million tons will be used for stainless steel production, up from 1.65 million ton in 2019. Demand from the battery sector will increase from 163,000 tons (2040) to 1.22 million tons.
However, this plan could fail if the illegal export practice is not curbed. It will accelerate the exploitation of nickel ore which will deplete the reserves before the downstreaming program is successful. KPK Region V Task Force head Dian Patria did not mention the origin of the nickel ore illegally exported to China. However, there are allegations that it came from mines in Sulawesi or North Maluku. (FIGURE-6)
According to a 2022 report by the United States Geological Survey (USGS), Indonesia has the largest nickel reserves in the world. The agency estimates that global reserves amount to more than 100 million metric tons, up 5.2 percent from 95 million metric tons found in 2021. Indonesia is estimated to hold 21 million metric tons, equivalent to Australia over the same period. (see Figure 6). This shows that Indonesia and Australia each accounted for 21 percent of total global nickel reserves. (FIGURE-7)
Nickel can be said to have a bright prospect in the future. The commodity is an important raw material in the manufacturing of electric vehicle (EV) batteries, which is growing exponentially. According to USGS, Indonesia was the world’s largest nickel producer in 2022. Total production was estimated to have reached 1.6 million metric tons, accounting for 48.48 percent of global nickel production in 2022. The Philippines came in second, with 330,000 metric tons, followed by Russia (220,000 metric tons).
If the illegal exports are left unchecked, Indonesia’s status is at risk because its nickel reserves will be heavily exploited in the form of illegal exports with no contribution to state coffers. Nickel is being exploited in the name of a downstreaming policy but is actually a curse on state finances. (FIGURE-8)
The government cherishes the ambition to build 53 mineral processing plants or smelters by 2024. Construction began in 2021 and is expected to be completed in 2024. But the plan looks doomed to fail and has stagnated. The government claims that of the 53 smelter projects, some of them have progressed between 30- 90 percent. More than half are nickel smelters (30 units — 13 existing and 17 planned). (see Figure 8).
In its 2022 Performance Report and 2023 Work Program, the ESDM Ministry stated that seven smelters were completed by 2022 and 17 will be completed by end-2023. Completed ones are PT Aneka Tambang, PT Vale Indonesia, PT Wanatiara Persada, PT Fajar Bhakti Lintas Nusantara, PT Weda Bay Nickel, PT ANTAM and PT Sebuku Iron Lateritic Ores.