RI needs different strategy for copper as nickel playbook ‘will not work’
Friday, November 14 2025 - 07:48 AM WIB
By Adianto P. Simamora
Indonesia must adopt a different downstream strategy for copper because the economic fundamentals and global market dynamics differ sharply from nickel, according to the Energy Shift Institute (ESI).
Speaking at the 2026 Indonesia Metal Outlook Conference, ESI Associate Principal Ahmad Zuhdi Dwi Kusuma warned that Indonesia risks turning its copper downstreaming into a “high-cost, low-return” industry if it continues applying the nickel-style export-ban approach without adjusting for copper’s very different market fundamentals.
Zuhdi explained that Indonesia’s nickel downstreaming success was driven by a unique combination of factors: strong global demand for battery materials, low domestic smelter operating costs, abundant nickel reserves, and China’s move to relocate heavy industry offshore.
“The combination of economics, industry characteristics, and policy formed a perfect recipe for success,” he said.
Copper, however, presents a fundamentally different landscape. Indonesia holds only 6 percent of global copper reserves and ranks seventh in global mine production. Meanwhile, China dominates the global refining ecosystem, controlling more than 45 percent of the world’s copper smelting capacity.
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“China has built an extremely efficient refining ecosystem, so copper from all around the world flies there just to seek the most efficient refining,” Zuhdi said.
ESI’s analysis shows that about 85 percent of copper’s value is created upstream—at the ore and concentrate stage—leaving much smaller margins for smelting compared with nickel or aluminum.
Zuhdi cautioned that forcing all copper ore to be processed domestically could undermine Indonesia’s position as the world’s third-largest copper ore exporter, as buyers may switch to alternative suppliers such as Chile, Peru, or Brazil.
He added that even with several new smelters planned or coming online, Indonesia’s domestic demand for refined copper remains too small to absorb production, and demand from the electric vehicle sector will also fall short.
ESI recommends a more flexible strategy that allows some concentrate exports while gradually developing basic copper manufacturing capacities, such as cables and electronics.
Editing by Reiner Simanjuntak