Indonesia Strengthens ESG Standards for Sustainable Critical Mineral Downstreaming

Indonesia is bolstering its Environmental, Social, and Governance (ESG) principles in managing critical minerals to ensure its national downstreaming program is sustainable and meets global market requirements.

Cecep M Yasin, Director of Mineral Business Development at the Ministry of Energy and Mineral Resources, emphasized that economic value addition alone is insufficient for mineral downstreaming. He stated that industrial development must be built on good governance and robust environmental protection, ensuring resource sustainability.

Indonesia utilizes the Work Plan and Budget (RKAB) as a strategic tool to control production, secure mineral reserves, and guarantee raw material supply for domestic downstream industries. This mechanism balances available reserves, production volumes, domestic processing capacity, and future industrial needs. The ministry is coordinating with the Ministry of Industry to meet downstream industry demands without compromising resource sustainability.

For 2026, the mineral and coal policy aims for both energy security and sustainability. Key instruments include a 25% Domestic Market Obligation (DMO) for coal to ensure national energy supply, particularly for power generation. The annual RKAB replaces the previous three-year system, allowing for stricter oversight and more effective production control. Additionally, the government is optimizing state revenue through refined mineral and coal benchmark prices, offering incentives for companies integrated with downstream processing.

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Strong downstreaming must be built on good governance. We must ensure that the development of downstream industries proceeds in line with the sustainability of mineral resources.