Indonesia will suspend new RKEF smelting projects, what impact will it have on the stainless steel industry?
According to Indonesian media news on November 21, the Indonesian government asked to predict the possibility of a decline in stainless steel supply according to the suspension plan of new investment in the construction of a rotary kiln electric furnace (RKEF) pyrometallurgical plant.
Andry Satrio Nugroho, head of the Centre for Industrial Trade and Investment, said the RKEF suspension of the policy, which is a lifeline for “downstream processing of high-grade nickel ore or sapropel”, could have a negative impact.
“Caution may be required as raw material quantities for stainless steel may be reduced and data on production of stainless steel may be disrupted.”
Andry Satrio Nugroho said on Sunday (Nov 21).
Andry Satrio Nugroho asked the government to prepare some alternative measures when imposing the moratorium, which is expected to help reduce the supply of steel-making raw materials.
Apart from suspending investment, the government can also reduce sapropel consumption through price intervention, he said. According to him, this can more effectively control the demand and supply of sapropel in the domestic nickel upstream industry.
“If it is purchased to be processed into stainless steel, the price is more expensive than the battery, and the price mechanism can be adopted.”
Meanwhile, a business source familiar with the “suspended RKEF discussions” said stainless steel companies are asking the government to reconsider the impact of halting new investment in RKEF plants on the capacity of Indonesia’s domestic upstream steel industry.
According to business sources, the moratorium will reduce domestic stainless steel production capacity, which will subsequently affect the national export score. As a result, the revenue potential of stainless steel exports will drop significantly thereafter.
Previously, the Ministry of Maritime Affairs and Investment Coordination (Kemenko Marves) was working on a policy to halt or suspend new investments in the construction of rotary kiln electric furnace (RKEF) pyrometallurgical plants – downstream of processing high-grade nickel ore or sapropel The production line, the stainless steel production process follows this.
Following the suspension, there will also be revisions to the benchmark mineral price (HPM) for high-grade nickel ore. It is hoped that the consumption of raw materials at limonite nickel processing plants will change.
Irwandy Arif, special staff member to the Minister of Energy and Mineral Resources, said the action was taken to increase new investment in hydrometallurgical plants that further process low-grade nickel ore or limonite into electric vehicle batteries to solar panels .
In an online discussion on Friday (November 18), Irwandy said:
“Menko Luhut has spoken to the ESDM minister and Mr Menperin, so the direction of consuming stainless steel with high nickel content should be limited.”
Irwandy said his ministry will discuss with the Maritime and Investment Coordination Department the upcoming new investment in the stainless steel RKEF technology plant.
On the other hand, he said, the moratorium is still in the works after a meeting in early 2021. He says:
“Earlier last year, we had an internal meeting to discuss progress on the industrial and mining side, but we had to push that forward again.”