The stainless steel industry is unlocking significant economic opportunities through a circular economy model, positioning itself as a potentially sustainable sector. This approach could substantially reduce the continuous mining of nickel for new stainless steel products.
C. S. Hsia, Chief Representative of Walsin Lihwa in Indonesia, explained that stainless steel products are highly recyclable. They can be repurposed into similar stainless steel items or transformed into entirely different products. Walsin Lihwa is a prominent group involved in wire, cable, stainless steel, and investments in technology.
“Ideally, recycling nickel within stainless steel aims to reprocess it into similar products. Purifying it to the point where you can create nickel for batteries is simply too energy-intensive,” Hsia stated during a public discussion in Jakarta on Monday (May 25).
However, Ahmad Zuhdi D. Kusuma, Associate Principal at the Energy Shift Institute (ESI), noted that a truly effective circular model hinges on well-developed nickel industrialization. “If the industry’s development is controlled right from the mining stage, there will come a point where we no longer need, or our demand for, new nickel feedstock will significantly decrease,” he explained.
The current challenge in Indonesia is that the nickel industry primarily produces semi-finished goods, with the majority being exported for final processing abroad. Notably, about six out of every ten tons of nickel entering the global supply chain originate from Indonesia.
“Right now, we export most of our stainless steel and then import finished products like kitchenware, faucets, and other metal fittings made from it,” he remarked, highlighting a similar issue observed with other mineral products.
An ESI report titled ‘Dominance without Depth: The Smelting Superpower that Imports its own Metal’ reveals that Indonesia’s nickel downstreaming industry remains heavily concentrated in upstream stages, such as smelting and basic steel production. Processing facilities typically stop at the stage of producing steel slabs.
ESI’s calculations suggest that advanced downstream industries offer substantially greater economic benefits. For instance, an investment of approximately $1.5 billion in a single smelter typically creates between 3,000 to 5,000 jobs. In contrast, the same investment channeled into advanced manufacturing and industry could potentially generate 15,000 to 20,000 jobs.
To foster the development of final stainless steel products through domestic nickel downstreaming, ESI has recommended several policies to the government. These include: restructuring fiscal incentives to benefit advanced manufacturing industries, transforming industrial zones into hubs for domestic supply chain development and supporting SMEs, and establishing national companies and research ecosystems to facilitate domestic technology transfer and innovation.