VDNI-OSS nickel workers demand salary hike, threatens full strike

The future of thousands of employees at PT Virtue Dragon Nickel Industry (VDNI) and PT Obsidian Stainless Steel (OSS), who are seeking a salary increase, will be determined through a tripartite mediation process.

This mediation follows a large-scale demonstration in front of VDNI's nickel smelter in Morosi, Konawe Regency, Southeast Sulawesi, on Thursday (Feb 20).

Jhonal Prayogo, Secretary of the Regional Leadership Council (DPW) of the National Trade Union Federation (FKSPN) of Southeast Sulawesi, explained that the mediation is in line with Law Number 2 of 2004 on the Settlement of Industrial Relations Disputes (PHI).

The companies (VDNI and OSS), employees (represented by FKSPN), and LBH Panglima Konawe (the legal representative of the labor union) have agreed to resolve the issue through mediation at the Konawe Labor Office (Disnakertrans) within the next 3-4 days.

The demands of VDNI-OSS employees include:

• Wage increase: A 6.5% wage increase in accordance with Minister of Manpower Regulation (Permenaker) Number 16 of 2024, along with increases in food allowances, housing allowances, transportation, and other benefits.

• Elimination of paid SP: The removal of paid warning letters (SP) with accompanying salary deductions for six months.

• Improved Occupational Health and Safety (K3): Enhanced risk management for workplace safety and health at VDNI-OSS.

• CSR Expectations: Fulfillment of Corporate Social Responsibility (CSR) initiatives, including providing clean water to the surrounding community.

Jhonal expressed hope that the tripartite mediation would lead to a mutually agreeable solution for the workers. However, he warned that if mediation fails and the demands are not met, a total strike would be a legal option under Articles 37 and 144 of Law Number 13 of 2023 concerning Manpower.

Read also: Minister supports upgrade of Virtue Dragon’s port

VDNI, a subsidiary of China’s bankrupted stainless steel giant Jiangsu Delong Nickel Industry Co., Ltd., operates a nickel smelter in Konawe Regency with 15 rotary kiln-electric furnaces and an installed production capacity of 800,000 tons of nickel pig iron per year. The facility was inaugurated on February 25, 2019.

OSS, which also operates a nickel pig iron smelter and stainless steel plant in Konawe, is a joint venture between China’s Xiamen Xiangyu Group and Jiangsu Delong Nickel Industry Co. Ltd.

Jiangsu Delong, one of the first investors in Indonesia’s nickel smelting industry, was forced into restructuring by a Chinese court last year. The company’s businesses have struggled due to China’s economic slowdown and intense competition from Tsingshan Holding Group, which also has large operations in Indonesia.

Global nickel prices have nearly halved since the end of 2022, as the surge in Indonesian production has led to mine and plant shutdowns elsewhere. Even smelters in Indonesia, which typically benefit from lower energy and labor costs, are now feeling the strain. Supplies of ore in the country have been tight for nearly a year due to the lack of mining quotas issued by the government.

Bloomberg reported on Thursday that PT Gunbuster Nickel Industry, another Jiangsu Delong nickel subsidiary in Indonesia, has cut production and is close to shutting down. This follows the collapse of its Chinese parent company. Gunbuster is reportedly delaying payments to local energy suppliers and has struggled to procure nickel ore. The smelter could soon halt production if the situation persists, according to sources familiar with the matter.

Editing by Reiner Simanjuntak