A SYSTEM DYNAMICS MODEL OF NICKEL INDUSTRY CHAIN IN INDONESIA TO OPTIMIZE ITS ADDED-VALUE

• Main Author: VALENTINA (NIM : 22115034), CYNTHIA
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/26335
• Institution: Institut Teknologi Bandung

As stated in The Law of Republic of Indonesia Number 4 of 2009, the holders of mining permit are required to undertake processing and refining activities on domestic mine products in order to increase the added-value of minerals and coal. The issuance of this regulation is able to boost the development of mineral downstream industries in Indonesia, including nickel. Currently Indonesian nickel ore is processed domestically into nickel hydroxide (NiOH), nickel matte, <br /> <br /> ferronickel and Nickel Pig Iron (NPI). However, almost all of these products are exported, while Indonesia imports nickel-containing semi-finished products, such as stainless steel, batteries, nickel alloys and nickel chemicals. This fact is contrary to the purpose of mineral added-value increase which mentioned in the Regulation of Government of Republic of Indonesia Number 23 of 2010 (PP No. 23/2010), among others to ensure the availability of raw materials to meet the needs of national industries and to optimize the state revenue. Refer to PP No. 23/2010, it can be concluded that one of the indicators that indicates the success of mineral added-value increase is the high domestic absorption. <br /> <br /> The low domestic absorption of nickel smelter products is due to the low capacity of nickel-based industry in Indonesia. In order to gain a better understanding of this phenomenon, a system dynamics model is developed to illustrate the condition of Indonesian nickel value chain. Later the model will be used for policy analysis. The Indonesian nickel value chain model consists of production (supply) and consumption (demand) subsystems. The production subsystem consists of mine, smelter and intermediary industry. The supply subsystem is influenced by profit and government policies related to raw mineral export, while the demand subsystem is related to population and income per capita. <br /> <br /> In the model, a policy structure was formed regarding the development of nickel intermediate industry. As this industry grows, the export of smelter products and import of nickel-containing semi-finished goods will decrease. This will lead to the increase of added-value. At the end of the simulation period (2021), the estimated net added-value from Indonesian nickel industry chain is USD 2,528,948,840. <br /> <br /> The development of the nickel intermediate industry depends on the rate of addition of its production capacity which related to the level of investment. Based on the literature review, the level of investment itself depends on the factors affecting investment attractiveness, such as the availability of infrastructure, availability and productivity of human resources, legal certainty, socio-political conditions and economic conditions of the country. However, these factors are not further elaborated in the model.