The progress of smelter development downstreaming, mandated by Law Number 4/2009, is not proceeding as planned. According to the Ministry of Energy and Mineral Resources, as of 2015, only 27 Mining Business Licenses (IUPs) showed smelter construction progress exceeding 80 percent. The majority, approximately 96 other IUPs, are at 0-5 percent completion or still in the feasibility study phase.
The slow development is due to constraints in industrial area infrastructure, limited energy availability, and fiscal issues. The Ministry of Energy and Mineral Resources plans to accelerate the process, as investment in these mineral refining facilities amounts to US$10.9 billion.
Furthermore, smelter construction is crucial for increasing the added value of minerals and coal. Benefits for the state include increased royalties and higher selling prices after metal refining.
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