The downstreaming of the nickel industry in Southeast Sulawesi has proven to be a boon for local shipping and shipping agency businesses. As the region’s nickel processing (smelting) capacity grows, there has been a significant increase in the transportation of raw nickel from mining areas to smelters, replacing previous practices of direct exports.
This shift has brought local shipping companies and agents into the spotlight, as their barges now play a crucial role in the transportation of nickel ore to processing plants. Mubarak, Acting Chair of the Indonesian Shipping Agencies Association (ISAA) of Southeast Sulawesi, discussed these developments during a meeting with media representatives from the Indonesian Port Editors’ Club on November 19, 2024, in Kendari.
Historically, nickel mined in Southeast Sulawesi was directly exported, often on foreign-owned vessels. Local shipping companies had minimal involvement in the process. However, with the Indonesian government’s push for downstreaming, nickel ore is now first processed in smelters before being exported as semi-finished products. This change has significantly increased demand for local shipping services.
“Previously, nickel mining products were directly exported, often using foreign ships,” Mubarak explained. “Local shipping’s involvement was minimal. But now, with downstreaming, nickel is processed into semi-finished goods like ferronickel, and local barges owned by shipping companies and ISAA members are increasingly being used for the transportation from mining areas to smelters.”
The downstreaming initiative has thus been a major opportunity for Southeast Sulawesi’s shipping and agency businesses, bringing new roles for local agents and boosting regional economic activity.
Southeast Sulawesi’s nickel industry has seen rapid growth in recent years, largely due to the establishment of multiple smelters in the region. These smelters, which convert raw nickel ore into products like ferronickel (used in stainless steel production), have attracted substantial investments both from domestic and international companies.
“The presence of smelters has had a transformative impact on the local economy,” Mubarak remarked. “Not only do they create jobs and foster industrial growth, but they also boost the demand for shipping services as more raw materials need to be transported for processing.”
Currently, most exports from Southeast Sulawesi are in the form of nickel alloys and stainless steel. However, Mubarak envisions a future where the region exports more value-added products, such as lithium, as the industry continues to develop.
“In the future, we hope to see more exports of finished goods like lithium, which would further stimulate both industrial and shipping activity here,” he added.
Nickel exports from Southeast Sulawesi primarily go to major industrial countries, such as China, Japan, and South Korea, where the materials are used in the steel and battery manufacturing industries.
Infrastructure Upgrades Needed to Support Growth
While the downstreaming initiative has sparked positive change, Mubarak emphasized that the region’s infrastructure must be enhanced to keep pace with the growing demands of the industry. Improvements are particularly needed in transportation and port facilities.
“To ensure the quality of processed nickel products, larger and more modern vessels will be required for exports,” he explained. “However, using bigger ships also means ports need to be upgraded to accommodate them. The infrastructure for loading and unloading goods must be improved to handle these larger vessels effectively.”
Additionally, Mubarak highlighted the need for better logistics systems, including investments in port facilities, heavy equipment, and efficient transportation networks to meet the rising demands of global markets.
He also stressed the importance of improving regional connectivity within Southeast Sulawesi, noting that limited road infrastructure could delay the distribution of goods from mines and smelters to ports.
The Growing Demand for Pilotage Services
Another area of growth is the demand for pilotage and tug services. While currently only a few shipping lanes in Southeast Sulawesi require pilotage due to low traffic, this is expected to change as the volume of shipments increases.
“I believe there are only two special ports that require pilotage services right now,” Mubarak said. “But as shipments from mining areas to smelters continue to rise, the need for additional pilotage services will certainly grow. This presents a significant opportunity for the pilotage and tug service sector in the future.”
