Trimegah Bangun Persada

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Downstream to Build North Maluku

22 May 2022

Stunning stories are continuously broadcasted from the earth of Kie Raha. There was a time when four sultanates were victorious and influenced various parts of the country, there was also a time when European scientists discovered a flora and fauna paradise in the Wallacea zone. Moloku Kie Raha, another name for North Maluku (Malut) Province, has now amazed the world with its abundant mineral resources. The image of Malut is increasingly famous for its endless treasures.

This province in eastern Indonesia holds 90 percent of domestic nickel reserves, along with the provinces of Central Sulawesi, South Sulawesi, and Southeast Sulawesi. Meanwhile, according to the 2020 Nickel Mining Booklet compiled by the Ministry of Energy and Mineral Resources (ESDM), 52 percent of the world's nickel reserves are in Indonesia with a total of 72 million tons of nickel. This number makes Indonesia a major player in the nickel industry.

Abundant mineral resources have attracted the attention of investors, both local and foreign, to invest in North Maluku. Mining Business Permits (IUPs) are starting to emerge. Workers flocked to join and revive this sector. The main target of mining companies is high-grade nickel ore (saprolite) for export. The nickel ore is then processed for various industrial needs, especially those made of stainless steel.

As the nickel mining industry in Indonesia develops, the government sees an opportunity to optimize this sector through downstream. The government then banned the export of nickel ore as of January 1st, 2020 through the Minister of Energy and Mineral Resources Regulation No. 11 of 2019, which at that time was signed by the Minister of Energy and Mineral Resources Ignasius Jonan. This regulation has now been amended by the Minister of Energy and Mineral Resources No. 17 of 2022.

At the beginning of its appearance, the regulation had panicked some nickel mining business players. They think that the nickel ore export business that has been running so far is under threat. However, this does not apply to HARITA Nickel. The company, which operates on Obi Island, South Halmahera Regency, has been running the downstream industry since 2016. The nickel downstream target launched by the government is also seen as an opportunity by HARITA Nickel.

HARITA Nickel's downstream commitment is shown by the establishment of the Megah Surya Pertiwi (MSP) pyrometallurgical smelter in 2016. The factory with the Rotary Kiln Electric Furnace (RKEF) technology is capable of producing 240,000 metric tons of ferronickel per year. MSP processes saprolite mined by Trimegah Bangun Persada (TBP) and Gane Permai Sentosa (GPS), as mining companies under HARITA Nickel.

HARITA Nickel's transformation does not stop there. After successfully producing ferronickel with MSP—which uses high-grade nickel—the next target is to optimize low-grade nickel, which has been considered a “waste product”. Low-grade nickel (limonite) can actually be used as a high-value product. To accomplish this, HARITA Nickel established a Halmahera Persada Lygend (HPL) refinery in 2019.

This new plant uses High-Pressure Acid Leach (HPAL) hydrometallurgical technology. HPAL technology is able to process limonite into Mixed Hydroxide Precipitate (MHP). Through the next process, MHP is further processed into nickel sulfate (NiSO4) and cobalt sulfate (CoSO4) with a production capacity of 180,000 tons per year. The product is a raw material for electric vehicle batteries. HARITA Nickel is the first party to successfully implement this HPAL technology in Indonesia.

The moment of inauguration of the HPL factory also received special attention from the central government. The inauguration which took place on Wednesday (23/6/2021) was attended by the Coordinator of Maritime Affairs and Investments Luhut Binsar Pandjaitan, Minister of Home Affairs Tito Karnavian, Minister of Transportation Budi Karya Sumadi, Minister of Investment/Investment Coordinating Board Bahlil Lahadalia, and Minister of Agrarian Affairs and Spatial Planning Sofyan Djalil. The ministers were also accompanied by the Governor of North Maluku KH. Abdul Gani Kasuba and South Halmahera Regent Usman Sidik.

On that occasion, Luhut Binsar Pandjaitan said that the establishment of HPL is good news for the national downstream industry. “We are very proud because we are all witnesses to the history of the establishment of HPAL in Indonesia. Indonesia can prove itself capable. This will be a future downstream development and support for the electric vehicle industry. The government will support the development of HPAL in Indonesia,” he said.

Generating the economy

The year 2020 was a time full of challenges. In addition to a ministerial regulation that prohibits the export of ore, this year the massive Covid-19 pandemic has also spread. Not a few industry players are stumbling because of these obstacles. Some were forced to cut the number of workers, some had to stop their operations completely. Meanwhile, at the Obi Site, HARITA Nickel continues to realize downstream by implementing very strict health protocols for the safety of workers.

The strong commitment of HARITA Nickel is able to make this company survive. Instead of succumbing to the pandemic, the HARITA Nickel downstream project actually accelerated and absorbed a larger workforce. This was realized even when the number of Indonesian unemployed due to Covid-19 increased by 2.56 million people (Central Statistics Agency, August 2020). At the same time, HARITA Nickel also participates in tackling the Covid-19 pandemic with the government, both central and regional, through various means.

HARITA Nickel's efforts have made a real contribution to the economic development of North Maluku. In 2020, the downstream sector plays an important role for the North Sumatran economy to continue to thrive in the midst of a national recession. The recession almost dragged all provinces except North Maluku, Central Sulawesi, and North Kalimantan. North Maluku was impressive by posting an economic growth of 6.66 percent in the third quarter of 2020. The main support is the downstream industry which jumped 106.98 percent.

North Maluku's economy continues to rise even though the Covid-19 pandemic has not completely ended. According to data from Bank Indonesia (BI) of North Maluku, in the third quarter of 2021, this province recorded the second-largest economic growth in Indonesia with a score of 11.41 percent. This figure is below Papua at 14.54 percent and above Central Sulawesi at 10.21 percent. Deputy Head of the BI Malut Representative Office, Hario Kartiko Pamungkas, said that downstream in North Maluku plays an important role in this achievement.

“Downstream products in the form of ferronickel and nickel oxide have the largest portion, with the respective amounts of 93.42 percent and 4.60 percent. This achievement cannot be separated from the development of the nickel smelter and refining industry in South Halmahera, that is HARITA Group which produces ferronickel and Mixed Hydroxide Precipitate (MHP) as raw materials for electric vehicle batteries," said Hario at the BI Annual Meeting in North Sumatra, Wednesday (24/11). /2021).

North Maluku's economic growth continues. In the first quarter of 2022, there was a growth of 29.63 percent compared to the first quarter of 2021. According to data from the North Sumatra Central Bureau of Statistics (BPS), this was again influenced by the downstream industry, which increased by 138.92 percent in the first quarter of 2022. Head of BPS Malut Aidil Adha said the increase in the number of processing factories that produce ferronickel and MHP has contributed greatly.

The contribution of the downstream sector was also recognized by the Secretary of the Provincial Government of North Maluku, Samsuddin A. Kadir. At the plenary meeting for the submission of the 2021 Regional Head Accountability Report (LKPJ), Monday (9/5/2022), he said this sector had made a very significant contribution. Thanks to downstream, the macro performance of North Maluku's development in 2021 can be supported to grow by 16.40 percent. This number has exceeded the target previously set, which is 9.40 percent.

The downstream sector is not only able to improve the North Sumatran economy but is also able to strengthen the national trade balance. President Joko Widodo, in an interview with Bisnis, Thursday (6/1/2022), said that downstream had made the trade balance a surplus. "Now it's been 19 months of trade balance surplus, where did that come from? From the stop of nickel exports. The figure appears to be US$20.8 billion. In the past, land exports containing nickel ore were only US$2 billion a year, meaning there was a very high jump," he said. 

HARITA Nickel as a pioneer in the downstream industry in North Maluku continues to transform for the better through improving human resources and technology. Even though it has become the first electric vehicle battery raw material producer in Indonesia, HARITA Nickel is not easily complacent. There are still many innovations that are trying to be realized to reinforce the company's commitment to downstream, including by establishing the Halmahera Jaya Ferronickel (HJF) smelter with an increasingly large production capacity.

Head of External Relations of HARITA Nickel, Stevi Thomas, hopes that the downstream carried out by HARITA Nickel can continue to provide the widest possible benefits. “This transformation in downstream is able to optimize natural resources as well as possible and create added value. We hope that the presence of HARITA Nickel and the products it produces can continue to contribute to economic development, both nationally and regionally, as well as other contributions to stakeholders, especially in the areas where we operate,” said Stevi.

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