The development of Indonesia’s nickel sector must be accompanied by sustainable and innovative financial support if it is to meet future demand and remain competitive in the global market, said a Securities advisor.

Telisa Aulia Falianty, Senior Advisor at BRI Danareksa Sekuritas, emphasized that while Indonesia's nickel industry has grown significantly over the past decade, financing from domestic institutions remains limited.

“Historically, nickel projects have been heavily backed by foreign direct investment, especially from multinational corporations. Local banks and financial institutions have only recently started to participate more actively,” she spoke at a conference between nickel producers, processors, and buyers in Jakarta, on Thursday, August 7, 2025.

While interest from domestic banks has increased, Telisa pointed out that lenders are cautious and selective, depending on where the project sits in the nickel value chain.

“Projects in the upstream sector tend to carry higher risks, while those downstream offer better financial viability,” she said, noting that risk premiums vary along the value chain.

Telisa added that the financial sector would be more attracted to nickel projects that are part of a well-integrated and sustainable ecosystem.

Financing alternatives

Telisa highlighted several financing alternatives that could support the expansion of Indonesia’s nickel industry, particularly as it aligns with the global energy transition.

“Beyond traditional investment loans, we should tap into instruments like transition bonds and green banks. These are increasingly relevant, given that the shift to nickel is part of the broader push for green energy,” she said.

She also cited international grants and innovative capital market tools, such as carbon markets and decarbonization instruments as potential sources of funding.

These options, she said, are particularly viable if nickel producers adhere to environmental standards and contribute to lowering carbon emissions.

With the global market currently facing a potential oversupply of nickel, Telisa urged stakeholders to avoid flooding the market simultaneously and to shift toward producing higher-grade nickel products.

“High-quality commodities tend to maintain stable prices, whereas low-grade, homogenous products are more vulnerable to price drops,” she said.

She proposed the formation of an OPEC-like body to coordinate production and maintain market balance.

Despite the oversupply risks, she believes the financing outlook remains positive − so long as demand, particularly from the electric vehicle (EV) sector, continues to grow.

ESG

As environmental, social, and governance (ESG) criteria gain traction in the financial sector, Telisa noted that Indonesian banks are increasingly adjusting their portfolios to align with ESG goals.

“Banks are trying to boost their ESG scores, but that doesn’t mean they’re immediately dropping clients in the coal industry,” she said.

“As long as these clients show a commitment to transitioning such as by implementing carbon capture and storage (CCS) or carbon capture, utilization, and storage (CCUS) they can still receive financing,” she added.

However, Telisa acknowledged that these technologies remain costly. She stressed that banks are encouraging coal companies to adopt cleaner technologies and present credible transition plans in order to remain eligible for financing.

“Once there’s a roadmap for greener operations, banks are willing to continue financing them, though on a more selective and phased basis,” she concluded.