Smelter Verification: Definition and Development of Nickel Smelters in Indonesia

smelter verification refers to the act of examining documents and field inspections for the purposes of building metal mineral refining facilities (smelters) in the country.

This verification is carried out every 6 months, in accordance with the regulations stipulated by the Minister of Energy and Mineral Resources Regulation No. 25 of 2018 concerning Mineral and Mining Enterprises.Coal, as well as Minister of Energy and Mineral Resources Regulation No. 17 of 2020 concerning Amendments to the first regulation (Permen of ESDM No. 25/2018)

This verification involves examining the planning documents for the construction of refining facilities, including technical designs, implementation schedules, and resource allocation. The results are then submitted in the form of a report describing the physical progress achieved in the construction of refining facilities.

Purpose of Smelter Verification

If explained in detail, there are two main objectives of the verification action for the construction plan for a refining or smelter facility. Following are the complete details:

1. Ensure Compliance with Regulations

Basically, the main objective of the verification action for plans for the construction of refining facilities or smelters is to ensure that the smelter construction plans comply with applicable regulations, especially ESDM Ministerial Regulation No. 25/2018.

2. Providing Export Permit Recommendations

Smelter verification It also aims to increase transparency in the process of granting recommendations for mineral export permits. The verification results determine whether the export recommendation from a mine can be obtained/extended or not.

If the smelter construction progress is below 90% of the target per 6 months, then the export recommendation can be canceled. So, this helps create clarity in mineral export permits.

Development of Nickel Smelters in Indonesia

So, how is the development of nickel smelter facilities in Indonesia as one of the largest mineral resources? Here are some important points you need to know, including the latest news, problems and progress:

1. Smelter Restriction Plan

In fact, the Indonesian Ministry of Energy and Mineral Resources (ESDM) itself has set a target to build and operate 53 smelters for the 2023-2024 period. However, recently, the government has planned to limit smelters in Indonesia.

The aim is to limit the development of nickel smelters which are increasingly mushrooming and uncontrolled, especially those that are not oriented towards green energy and environmentally friendly industries. This was done to maintain a balance between smelter construction and limited nickel raw material reserves.

Because even though nickel in Indonesia is quite abundant, this resource can still run out if it continues to be exploited. This plan is also supported by the Indonesian Mining Experts Association (PERHAPI).

The General Chairperson of PERHAPI, Rizal Kasli, suggested that the focus of development should only be given to smelters that implement the use of clean energy such as geothermal, wind, hydroelectric power, solar, biogas, etc. Their goal is to support the government’s efforts towards net zero emission in 2060.

3. Funding Constraints

One of the main obstacles in developing a nickel smelter that meets government standards is the problem of funding. Several companies are having difficulty finding large loans for nickel smelter projects.

A number of local banks are reluctant to provide funding due to the problem of inadequate electricity sources at several smelter construction sites. However, there are also alternative efforts to obtain funding through initial public offering (IPO), bonds, or bank support.

4. Energy and Land Issues

Energy supply and land acquisition are other obstacles in developing nickel smelters. Some areas that have nickel reserves do not have adequate energy infrastructure.

In addition, implementing solutions such as solar panels requires large areas of land. The licensing process also requires acceleration from the government to enable smelter construction to run smoothly.

5. There is Oversupply

Nickel Pig Iron (NPI) production in Indonesia is experiencing over supply because many business people are interested. Pyrometallurgical technology, which is cheaper than HPAL technology, is a factor that drives NPI production.

There is oversupply This ultimately has an impact on reducing NPI prices, and prices are predicted to continue to be out of control if production is still high. Therefore, the government plans to control NPI production in Indonesia.

6. Expansion of the Hydrometallurgical Smelter

To overcome the problem of oversupply and meet the demand for raw materials for electric batteries, plans to build a hydrometallurgical smelter are important as an alternative solution.

However, building a hydrometallurgical smelter is more expensive than pyrometallurgical, namely around US$ 1 billion or Rp. 15 trillion. Therefore, the government is trying to facilitate funding through banking and efforts to accelerate licensing.

The Largest Nickel Smelter in Indonesia

After understanding what smelter verification is and what the latest developments regarding nickel smelters in Indonesia are, also find out what the largest nickel refining facilities in Indonesia are currently:

1. PT Tsingshan Steel Indonesia

Located in Morowali Regency, Central Sulawesi, PT Tsingshan Steel Indonesia is one of the largest nickel smelters in Indonesia. which focuses on productionNickel Pig Iron (NPI).

NPI itself is an important raw material in stainless steel. With a production capacity of 507,000 toys, this company has a major contribution in meeting demand for nickel.

2. PT Sulawesi Mining Investment

Still located in Morowali, Central Sulawesi, there is also PT Sulawesi Mining Investment as one of the main players in the nickel mining and smelter industry in Indonesia.

They have a production capacity of 300,000 tpy NPI and also have nickel ore processing and refining capabilities of 3,000,000 tpy. That is why their role in the nickel production chain is quite significant.

3. PT Megah Surya Pertiwi

If the previous two companies focused on NPI, PT Megah Surya Pertiwi specializes in Ferronickel (FeNi) production and is located in Maluku. In fact, since the first quarter of 2018, they already have four smelter lines.

That is why their Ferronickel (FeNi) production is able to reach a capacity of up to 198,158 tpy. With an input capacity reaching 2,079,733 tpy, this company plays an important role in providing FeNi products for Indonesian industry.

4. PT Wanatiara Persada

Lastly, there is PT Wanatiara Persada which is also located in Maluku, precisely on Obi Island, North Maluku. Just like PT Megah Surya Pertiwi, they focus on refining and processing Ferronickel (FeNi) type nickel ore.

Its own production capacity reaches 161,740 tpy with input capacity reaching 2,229,656 tpy. By focusing on FeNi production, this company contributes to meeting the high demand for domestic nickel.

Indonesia has a key role in global nickel supply. So, it’s necessary to use smelter verification service nickel by independent verifiers such asSucofindo to ensure your company meets government regulations. Get more information and contact us via the link following!

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