Jakarta, TAMBANG,- Jakarta, TAMBANG, Bank DBS recently held The 4th DBS Metal and Mining Forum with the theme “Forging Global Connections“. On this occasion, this leading financial institution conveyed several things. This discussion forum is an opportunity to bring together industry leaders and decision makers to discuss opportunities, challenges and the latest trends. This also shows the increasing role of international collaboration and innovation in driving sustainable growth.
Through this forum, DBS Bank hopes to enrich strategic insight, strengthen cross-border partnerships, and encourage increased foreign investment flows to Indonesia.
DBS sees its strategic position and wealth of natural resources as making Indonesia at the center of the future of the metals and minerals industry. By developing downstream and increasing added value, Indonesia can transform from being just an exporter of raw materials to become a major player in the global critical mineral supply chain.
“DBS Bank is committed to being a trusted partner in every step of this journey, not only through financial solutions, but also through relevant insights and support so that businesses can continue to grow,” said President Director of PT Bank DBS Indonesia Lim Chu Chong.
In this forum there are several main insights conveyed by the experts. There are at least five things. First, foreign capital wear is shrinking amidst global uncertainty. It was explained that the world is facing an economic slowdown in various regions, including China and Europe. Shifts in supply chains due to the new US tariff policy also put pressure on global trade volumes and triggered corrections in energy and non-energy commodity prices.
This combination of factors caused foreign direct investment (FDI) flows to decline sharply. This pressure arises from various factors, ranging from tensions between the US and China, tariff wars, climate change, to developments in artificial intelligence (AI). This combination of dynamics makes global conditions increasingly difficult to predict.
For developing countries, the decline in FDI is a big challenge because it hampers efforts to encourage more ambitious Gross Domestic Product (GDP) growth. This condition is increasingly real for Indonesia, considering that the flow of foreign investment from China as one of the largest contributors is also weakening. This situation is expected to suppress expansion in the metal and mining sector, especially in the nickel downstream industry.
Second, Indonesian nickel remains dominant in the global market. Until now, nickel has become a global strategic commodity as demand for electric vehicle batteries and environmentally friendly technology increases. Indonesia stands out as a major producer, with production capacity throughout 2024 reaching 2.2 million metric tons. This figure is equivalent to more than 50 percent of global supply. This position emphasizes Indonesia’s superiority compared to other ASEAN countries.
In addition, Indonesia has the most complete battery component ecosystem outside China, with several production lines whose capacity even exceeds that of South Korea and Japan. Growth of the electric vehicle industry (electric vehiclesDomestic /EV) is also driving demand, as manufacturers expand their manufacturing capacity. With efficient regulations and investment certainty, Indonesia has a great opportunity to become a center for EV battery production and innovation at the regional level.
The third thing is related to downstreaming. Experts see downstreaming as a new direction for the metal and mining industry. It is stated that Indonesia, the Philippines, Malaysia and Vietnam have their respective mineral advantages. The main challenge is not the availability of resources, but the ability to develop industry from upstream to downstream so that added value is created within the country.
The Ministry of Energy and Mineral Resources (KESDM) considers downstreaming to be the main pillar in the government’s Asta Cita agenda. This policy is seen as crucial for realizing energy independence and strengthening state sovereignty, while encouraging more inclusive economic growth, creating quality jobs and expanding social justice.
“Critical minerals are considered vital for the country’s sovereignty. However, smelting capacity is also very important, because without the ability to process minerals into metal, this potential cannot be realized,” said Managing Director, Global Head of Metals and Mining, DBS Bank Ltd. Mike Zhang.
It was also emphasized that through processing policies and increasing added value, Indonesia is starting to shift from being an exporter of raw materials to becoming an important player in the global critical mineral supply chain. One of the most obvious evidence is seen in nickel downstream. The export value, which was previously around USD 3.3 billion in 2017-2018, will increase rapidly to almost USD 40 billion in 2024.
This increase not only strengthened state revenues, but also helped improve the trade deficit significantly. Therefore, solid investment flows are still needed to optimize downstreaming and increase the added value of minerals.
The fourth thing is that metal prices are fragmented, a new challenge for the global industry. DBS Bank sees that currently, the world is facing increasingly complex economic dynamics. Commodity and metal price movements are strongly influenced by fluctuations in the value of the US dollar. This is based on the fact that most metals trade uses these currencies.
The risk of dollar depreciation has the potential to push up metal prices, while slowing decarbonization in some countries, such as Europe, is also affecting demand for clean energy and the transition to electric vehicles. These factors make the metals market increasingly fragmented and difficult to predict.
This condition is exacerbated by the limited concentration of critical mineral supplies in several countries. As a result, metal prices are no longer uniform globally, but vary between countries and regions, one of which is copper. This phenomenon marks a shift from a purely globalized economy towards a geopolitical economy, in which countries increasingly use economic policies to achieve political goals, with increasing tendencies towards nationalization, regionalization and protectionism.
The five energy transition targets are increasingly ambitious. The mining industry must be ready to adapt. It was stated that the energy transition is an important aspect in the metal and mining industry, especially in looking for environmentally friendly alternative energy sources. Transitioning from heavy dependence on fossil fuels to green energy is a strategic step to ensure every industrial process is more sustainable.
This step is in line with the government’s agenda to increase New Renewable Energy (EBT) in the national energy mix, so the mining industry needs to move in line with this target.
At the same time, the shift towards clean energy also coincided with domestic policy adjustments, including the implementation of a progressive royalty scheme and updates to licensing and export management mechanisms. This encourages companies to adapt and reorganize operational strategies and ensure compliance with dynamic regulations.
“Alternative energy sources are also a very important aspect in this transition. In the midst of these efforts, it is important to ensure that the energy transition is as clean and environmentally friendly as possible. This process marks a shift from heavy dependence on fossil fuels towards the use of greener energy sources,” explained DBS Bank Senior Economist Radhika Rao.
With a combination of cross-border capabilities, sectoral expertise, a track record of large project financing, and a strong regional network, Bank DBS continues to strengthen its position as a strategic partner for the Indonesian metals and minerals industry. In line with national priorities to accelerate downstreaming and attract more global investment, Bank DBS is committed to providing relevant solutions, broad market connectivity, and advisory trustworthy for all stakeholders.
In the future, DBS Bank will continue to support the transformation of this sector so that it can provide greater added value to the Indonesian economy while also playing an important role in the global supply chain.
Source: www.tambang.co.id
