The impact on downstream policy implementation for mineral export products in Indonesia: marine transportation point of view

Abstract

Indonesia is a country with abundant natural resources, particularly for metal mineral mining. In 2020, Indonesia is recorded to have approximately 1.2 billion tons of bauxite ore reserves, which made Indonesia the 6th largest owner of bauxite reserves in the world. Apart from bauxite, around 52% or 72 million tonnes of world nickel reserves are also located in Indonesia. However, most of the bauxite and nickel mining production have been exported in the form of ore or concentrate, which has a much lower selling value compared to the processed products. Therefore, the Indonesian government imposed a ban on the export of unprocessed minerals through Law Number 3 of 2020. The export ban is intended for mineral mining products, especially bauxite and nickel, to be processed first into semi-finished goods or finished goods, to provide added value in terms of foreign exchange for Indonesia. This study aims to determine the impact on the implementation of the downstream program, especially for nickel mineral product from marine transportation point of view. The method used in this study is optimizing non-linear programming to determine the type and number of fleets needed to transport nickel from the mine site to the smelter and its processed products from the smelter to the importing country by considering the minimum unit transport costs. The output of this research is the configuration of the sea transport fleet required for the implementation of the mineral product downstream program as well as the potential added value of transporting those processed products into the Indonesia‘s balance of payment.