Green opportunity for Indonesia steel sector

Regional Development Plans Continue Apace

The Covid-19 pandemic appears to have made just a slight dent in Indonesia’s ambitious infrastructure development plans to support its 270 million strong population.

Under President Joko Widodo (Jokowi), Indonesia’s 41 capital intensive strategic infrastructure projects are outlined in its five-year medium-term development plan (RPJMN) set from 2020 to 2024. Together, these 41 projects of ‘national priority’ will require $500 billion of investments.

The crown jewel among these projects is the construction of a new capital in East Kalimantan in the isle of Borneo by 2024. Concerns about developing a whole new city while preserving the rich biodiversity in the area will be closely watched, putting the construction sector – and by extension, steel producers – in the spotlight with regards to sustainability.

Other key projects under RPJMN include the development of metropolitan regions for Palembang, Banjarmasin, Makassar, Denpasar, which is aimed at boosting GDP growth outside the main island of Java (which accounts for 60% of Indonesia’s economy). 

Indonesia’s effort to decentralize industry development outside Java is itself a move towards building a path to long-term sustainability. Connectivity also remains a huge concern in the archipelago nation, as other strategic projects include high-speed rail lines connecting different regions within Indonesia as well as the expansion of local public transport systems. 

In tandem with this, the race is on to create 100 Smart Cities across Indonesia by 2045. City authorities will be considering green building and smart infrastructure, adding extra focus on steelmakers’ decarbonization efforts. 

 At the Crossroads of Opportunity

While the steel industry remains essential to connecting communities, driving incomes, and nation-building, tracking and monitoring sustainability also has the added benefits of increasing yields, reducing waste and improving process reliability across the steel value chain.

In the short-term, China’s pledge to reduce carbon emissions will see associated steelmakers in Southeast Asia switch to cleaner technologies, and renovate steel plants for EAF adaptability. Long-term, there may be increased pressure on steel scrap availability for furnaces as steel projects shift out of China into surrounding regions. Indonesian steelmakers are at the crossroads of opportunity, and there is no better time to marry economic ambition with sustainability.

The future of steel remains bright, but it is important that it be as green as possible. Building a better life for future generations extends beyond the rising superscale structures of today to the long-term impacts of industry down the road. 

All players across the steel industry — upstream, midstream and downstream, can participate in reducing the sector’s carbon emissions and pave a pathway to a net zero future. Whether it is steel businesss learning to embrace sustainability and explore decarbonization within their processes or project developers and construction firms looking to source carbon-neutral steel, Gunung Prisma’s holistic steel solutions helps steel players take the first green step towards sustainability.

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