JAKARTA: The government is stepping up efforts to build a domestic rare earth industry and keep the processing of the valuable minerals onshore, despite recent export delays caused by tighter scrutiny of rare earth content in commodities such as nickel cathode and nickel pig iron (NPI).
Experts, however, cautioned that low concentrations of rare earth elements and the technical challenges of extracting them could undermine the economic viability of developing the industry.
In July, more than 100 shipments were delayed at Indonesian ports due to a mandatory testing programme screening mineral shipments for rare earth content, despite the lack of clear government guidelines on acceptable levels.
Chief of Staff Dudung Abdurachman clarified on Aug. 3 that the export of rare earth elements as primary products is indeed prohibited. However, this does not automatically apply to rare earth elements found as “accompanying elements or by-products” in primary and derivative mining products.
The bottlenecks prompted the government to begin mapping associated mineral content across various downstream products, a step intended to safeguard investment continuity while preparing a more targeted regulatory framework for rare earths.
The Indonesian Mining Experts Association (Perhapi) chairman Sudirman Widhy Hartono said that government teams have visited several nickel mining and smelting companies to collect samples from both NPI products and tailings to determine residual rare earth content.
"The government is aware that nickel downstream products, such as NPI, do not represent a final refined state. As such, they are expected to still contain other mineral elements, including rare earths and iron, within them," Sudirman told The Jakarta Post on Wednesday.
He explained that the processing stage for NPI has only reached 40-50 percent completion. The government is currently preparing regulations and a “channeling” mechanism to ensure these elements can be captured and refined domestically.
Sudirman described the regulatory intent as a “valid move” but cautioned that the rare earth content in NPI products is extremely low, and rules must clearly distinguish between commercial rare earth products and naturally occurring rare earth by-products found in very low concentrations.
The rare earth content in laterite nickel ore, for example, is recorded at 52 parts per million (ppm) for scandium, 18 ppm for neodymium, 60 ppm for praseodymium and 8 ppm for dysprosium.
“Without a clear distinction, there is a concern that exports of nickel derivative products could be disrupted by technical field inspections regarding rare earth content,” he warned.
On the other hand, extracting rare earths from nickel laterite residues requires processing massive volumes of material, while the elements' nearly identical chemical properties demand high precision and expensive extraction agents.
“During the pyrometallurgical process, rare earths become bound within the slag and are also lost in the off-gas. Currently, no commercially available technology is capable of separating rare earth elements from the slag,” Hendra Sinadia, chair of the energy and mineral resources mining committee at the Indonesian Employers Association (Apindo), told the Post on Thursday.
Individual rare earth mining and refining projects continue to involve high capital costs, ranging from tens of millions to more than US$1 billion, according to an International Energy Agency (IEA) report.
Capital intensities sit at around $100,000 per tonne for mining and $200,000 per tonne for refining, far exceeding those of almost any other energy mineral, the same report reads.
These elevated costs reflect the structurally expensive nature of rare earth projects, particularly at the refining stage, where complex processes are unavoidable.
The Energy and Mineral Resources Ministry is drafting a ministerial regulation to establish concentration limits for rare earths present as by-products in metal commodities.
Tri Winarno, the ministry's minerals and coal director general, said the ministry is still reviewing the rare earth concentration limits for by-products, including the relevant definitions and technical specifications.
"It is still under review. Once finalised, the regulation will be issued, specifically as a ministerial regulation," Tri said on Aug. 7. - Jakarta Post/ANN
