Figure 1. Prof. Subroto with Kania Sutisnawinata, Budi Gunawan Sadikin, Mahendra Siregar, Prof. Rhenald Kasali and Prof. Rudi Sayoga.

PT Indonesia Asahan Aluminum (Inalum), as the new state-owned mining holding company, founded Mining and Mineral Industry Institute (MMII). MMII’s objective was to become the research center for the downstream mining industry and help the government in reaching the target of increasing the added value of the mining sector. The launching was held on 1 February 2019, at Darmawangsa Hotel Jakarta and was attended by Indonesia’s energy and mining experts. In this event, there were also MoUs signed between MMII and five national universities; Universitas Cendrawasih (Uncen), Universitas Indonesia (UI), Institut Teknologi Bandung (ITB), Universitas Gajah Mada (UGM) and Institut Teknologi Sepuluh November (ITS). An MoU between MMII and Ministry of Energy and Mineral Resources (MEMR), represented by F.X. Sujiastoto as the head of research and development unit, was also signed.

Prof. Subroto as the former minister of energy and mineral resources, in his opening speech, highlighted the importance of low carbon development policies as the tool to come out of the trap of middle-income country. In the mining industry, the development should start focusing on developing its downstream industry so that the mining products value would be increased. Mrs. Ratih Amri as the chairperson said that MMII was mandated with three main mission; (1) to manage national mineral resources reserved through continuous exploration, (2) to accelerate the mining downstream industry development and (3) to be the world-class company.

The event was followed by a panel session moderated by Kania Sutisnawinata as the Deputy Chief Editor of Metro TV and had four speakers: Budi Gunawan Sadikin, the Inalum President Director; Mahendra Siregar, the Ambassador of Republic of Indonesia to the United States of America; Prof. Rudy Sayoga,  Professor of ITB and Rhenald Khasali as founder of Yayasan Rumah Perubahan. Budi Gunawan Sadikin mentioned that in the end of 2018, Inalum already handled four other state-owned mining company which are PT Antam, PT Bukit Asam, PT Timah and PT Freeport. It made 34 percent of the Inalum group revenue from the coal industry. To give added value for their coal product, Inalum is planning to build infrastructure to process the coal product into syngas which will be transformed into methanol, then into Dimethyl Ether (DME) and other derivative products. Another two projects that are planned to be built this year are Alumina Smelter and High-Pressure Acid Leaching Process (HPAL) Smelter. It is hoped that these smelter projects will give added value in terms of export price and help Indonesia established the mining product market in the global value chain. As stated by Mahendra Siregar, the global value chain has been disrupted due to the trade war, so it is necessary to secure the national export commodities by improving its value in the global market.

Other insights were presented by Prof. Rhenald Kasali and Prof. Rudi Sayoga. Prof. Rhenald Kasali shared his experience in Buru Island when the gold discoveries triggered sudden inflation and many multiplier effects on the island. The local people were so excited with the gold discoveries that they started mining and abandoned their crops. The sudden rise in income for the local people made the demand for primary needs increased, while the quantity of the consumer goods was decreased. The imbalance between demand and supply then lead to the local inflation in Buru Island. This example shows the importance of government involvement in the mining sector to regulate the mining and control the multiplier effect caused by the mining industry. There are four economic multiplier effect in the mining industry: (1) Backward Linkage, (2) Forward Linkage, (3) Demand Linkage and (4) Fiscal Linkage. While Prof. Rudi Sayoga voiced his concern on the post-mining land issues; it is necessary for a mining company to thoroughly plan their mining industry so it will always support the national sustainable development. The government should be able to guarantee that there will be no “ghost town” in Indonesia’s post-mining land.

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