The Indonesian government is now starting to limit permits for the construction of class II nickel smelter projects that produce Nickel Pig Iron (NPI) and Ferronickel (FeNi).
Septian Hario Seto, Deputy for Investment and Mining Coordination at the Coordinating Ministry for Maritime Affairs and Investment, stated that the move to limit the construction of class II nickel smelters aims to maintain nickel supply levels.
“Because if there is an oversupply, it will definitely cause prices to fall. This is what we are also avoiding,” said Seto at Kompas Tower last week.
Seto explained that the government had decided not to approve new projects. Meanwhile, projects that have previously obtained permits are still allowed to continue construction.
According to him, smelter business players have also halted new investments for smelter projects that produce NPI and FeNi products.
“We haven’t issued any new permits either, as far as I know. So those who are currently building are those who obtained permits earlier,” explained Seto.
He also pointed out that business actors are automatically refraining from making new investments due to the recent decrease in the selling price of nickel. The decline in commodity prices is considered to have an impact on the economic value of the projects.
It doesn’t stop there; smelter business actors are even said to have started investing to improve the quality of their processing. This means that nickel ore is processed into more value-added products.
“So, in the end, smelter entrepreneurs are also trying to find a way,” added Seto.
However, Seto emphasized that the government will not provide additional incentive support for increasing added value, which smelter companies are currently pursuing.
According to him, the various incentives provided so far are sufficient. Several incentives have been granted, including tax holidays and exemptions from import duties for equipment used in the construction of smelter projects.
“That’s enough for now. I’ve also told them that we can’t compete like the European Union, which provides capital expenditure subsidies,” concluded Seto.
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