Annual Report 2023
Annual Report 2023
Leading the Transition to Sustainable Value Chains
In 2023, the global commodities market continued to correct itself after experiencing a commodity supercycle, primarily due to geopolitical conflicts in Europe. The trend of nickel prices reversed direction due to decreased demand and increased supply growth. However, the Company mitigated these dynamics by consistently prioritizing operational excellence through the implementation of good mining practices, focusing on strengthening a safety-first culture and maintaining cost leadership to achieve effective and efficient production levels.
The completion of several expansion projects by the subsidiaries resulted in a significant increase in production capacity and drove revenue growth. The Company’s strategy is to maintain production and sales at the most optimal level to ensure positive profitability and sound financial performance. Amidst challenges in the global market, the Company is focused on realizing the downstream integration of the nickel industry as a milestone achievement in the development of Indonesia’s new energy resources sector. In anticipation of market improvements, the Company is poised to lead the transition towards a sustainable value chain.
Governance
We have strengthened our sustainability governance by introducing several key policies designed to embed sustainability across the entire organization. Notably, the launch of our consolidated Sustainability Policy marked a major milestone—demonstrating a strategic commitment to placing sustainability at the heart of our operations.
New policies on responsible raw material procurement and land acquisition were also introduced, along with the development of a Human Rights Policy. These policies are more than just guiding documents—they reflect our Group’s dedication to leading the industry in responsible mining and processing.
The Company remains responsive to evolving industry standards and stakeholder expectations. As part of this commitment, we are advancing assessments against two globally recognized frameworks:
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The Initiative for Responsible Mining Assurance (IRMA), which will evaluate all mining sites under the Company’s responsibility, with full completion expected by 2025.
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The Responsible Minerals Assurance Process (RMAP) under the Responsible Minerals Initiative (RMI), which aims to certify responsible sourcing practices at PT HPL, targeting conformance by 2024.
Environment
Greenhouse gas (GHG) emission reduction remains a top priority both in Indonesia and globally. In 2023, we partnered with an international development agency to explore tailored decarbonization scenarios suitable for our remote operations on Obi Island.
We also conducted internal assessments to better understand climate risks and the life cycle costs associated with our operations. This approach supports a phased investment strategy for decarbonization—one that balances investor interests with the long-term sustainability of our business.
In 2023, we initiated planning for a 300 MWp solar power plant, which is scheduled to begin operation in 2025. Development is actively underway at the time of this report.
In support of biodiversity protection, the Company has committed to achieving a net terrestrial conservation gain within 20 years. To help realize this vision, we launched a landscape-level Nature Risk Assessment across Obi Island to better understand the broader ecological impact of our mining activities.
Our long-term conservation ambitions extend beyond our operational boundaries. We continue to restore and revegetate mined land, with 232.09 hectares revegetated as of the end of 2023. We are also protecting coastal zones through mangrove forest rehabilitation, and on the marine conservation front, nearly 1,700 artificial reef blocks have been installed to stimulate coral growth and support fish spawning grounds.
Additionally, we expanded our sedimentation ponds in 2023, increasing capacity to the equivalent of more than 500 Olympic-sized swimming pools, ensuring effective runoff water management at our operational sites.
Social
In 2023, we conducted a Human Rights Due Diligence Assessment with the support of the Foundation for International Human Rights Reporting Standards (FIHRRST). Aligned with the UN Guiding Principles on Business and Human Rights, this assessment will help us proactively address growing expectations around human rights protections across the mineral supply chain.
It also enhances our ability to understand, support, and engage with communities around Obi Island. Our community support efforts continued throughout 2023, delivering a Social Return on Investment (SROI) of 2.81. Our SME development programs showed strong progress, with significant increases in total income.
In the same year, we launched Salam Kawasi, an integrated agricultural center, and completed the construction of a new settlement for Desa Kawasi, aligned with government-led resettlement initiatives.
The human rights assessment also informed our initiatives in Operations, Health, and Safety. We are proud to have achieved certifications in ISO 14001 (Environmental Management), ISO 45001 (Occupational Health & Safety), and SMK3 (Indonesian Occupational Safety Management System) across several business units, with further certifications planned in 2024.
On the labor front, we reaffirmed our commitment to diversity and inclusion by establishing a Gender and Diversity Task Force.
As of 2023, 85% of our total workforce were Indonesian nationals, with 46% originating from North Maluku. We also increased the number of local suppliers to 164, up from just 35 in 2020. Notably, North Maluku recorded the highest economic growth among all 38 Indonesian provinces in 2023.
Environment
Greenhouse gas (GHG) emission reduction remains a top priority both in Indonesia and globally. In 2023, we partnered with an international development agency to explore tailored decarbonization scenarios suitable for our remote operations on Obi Island.
We also conducted internal assessments to better understand climate risks and the life cycle costs associated with our operations. This approach supports a phased investment strategy for decarbonization—one that balances investor interests with the long-term sustainability of our business.
In 2023, we initiated planning for a 300 MWp solar power plant, which is scheduled to begin operation in 2025. Development is actively underway at the time of this report.
In support of biodiversity protection, the Company has committed to achieving a net terrestrial conservation gain within 20 years. To help realize this vision, we launched a landscape-level Nature Risk Assessment across Obi Island to better understand the broader ecological impact of our mining activities.
Our long-term conservation ambitions extend beyond our operational boundaries. We continue to restore and revegetate mined land, with 232.09 hectares revegetated as of the end of 2023. We are also protecting coastal zones through mangrove forest rehabilitation, and on the marine conservation front, nearly 1,700 artificial reef blocks have been installed to stimulate coral growth and support fish spawning grounds.
Additionally, we expanded our sedimentation ponds in 2023, increasing capacity to the equivalent of more than 500 Olympic-sized swimming pools, ensuring effective runoff water management at our operational sites.
Social
In 2023, we conducted a Human Rights Due Diligence Assessment with the support of the Foundation for International Human Rights Reporting Standards (FIHRRST). Aligned with the UN Guiding Principles on Business and Human Rights, this assessment will help us proactively address growing expectations around human rights protections across the mineral supply chain.
It also enhances our ability to understand, support, and engage with communities around Obi Island. Our community support efforts continued throughout 2023, delivering a Social Return on Investment (SROI) of 2.81. Our SME development programs showed strong progress, with significant increases in total income.
In the same year, we launched Salam Kawasi, an integrated agricultural center, and completed the construction of a new settlement for Desa Kawasi, aligned with government-led resettlement initiatives.
The human rights assessment also informed our initiatives in Operations, Health, and Safety. We are proud to have achieved certifications in ISO 14001 (Environmental Management), ISO 45001 (Occupational Health & Safety), and SMK3 (Indonesian Occupational Safety Management System) across several business units, with further certifications planned in 2024.
On the labor front, we reaffirmed our commitment to diversity and inclusion by establishing a Gender and Diversity Task Force.
As of 2023, 85% of our total workforce were Indonesian nationals, with 46% originating from North Maluku. We also increased the number of local suppliers to 164, up from just 35 in 2020. Notably, North Maluku recorded the highest economic growth among all 38 Indonesian provinces in 2023.
Tinjauan Kondisi Eksternal
Pada tahun 2023, ekonomi global menghadapi tantangan besar akibat perlambatan pertumbuhan di negara-negara maju, dampak berkepanjangan dari perang Rusia-Ukraina, serta ketidakpastian kebijakan moneter. Di Tiongkok, meskipun perekonomian mulai pulih setelah pelonggaran kebijakan Zero-COVID, krisis sektor properti masih menjadi hambatan. Tekanan geopolitik dan penurunan harga komoditas utama turut berdampak pada perdagangan global, termasuk Indonesia. Sementara itu di dalam negeri investor cenderung bersikap wait and see karena memasuki masa Pemilu 2024.
Meskipun begitu, Indonesia tetap menunjukkan resiliensi dengan pertumbuhan ekonomi sebesar 5,05%. Program hilirisasi yang didukung oleh berbagai kebijakan pemerintah mampu menahan perlambatan investasi di tahun politik. Investasi hilirisasi di sektor mineral seperti pembangunan smelter nikel, bauksit, dan tembaga, serta pabrik sel baterai kendaraan listrik terus berjalan dan menjadi penopang pertumbuhan investasi.
Tinjauan Industri
Indonesia memiliki cadangan nikel terbesar di dunia, menjadikannya pemain kunci dalam industri global. Permintaan nikel selama ini didominasi oleh sektor baja nirkarat, namun transisi energi mulai mendorong pertumbuhan permintaan untuk baterai kendaraan listrik. Pada 2022, industri nikel mengalami tren positif dengan harga yang menguat signifikan akibat meningkatnya permintaan global dan faktor geopolitik. Namun, pada 2023, pasar nikel mengalami tekanan akibat perlambatan ekonomi global, ketegangan geopolitik, dan kelebihan pasokan, terutama dari Indonesia dan Tiongkok. Harga nikel pun mengalami penurunan tajam dibandingkan tahun sebelumnya. Meski begitu, Indonesia terus mendorong hilirisasi untuk meningkatkan nilai tambah industri nikel dalam negeri.
Tinjauan Segmen Usaha
Perseroan berperan dalam hilirisasi nikel Indonesia dengan mendirikan pabrik RKEF untuk produksi feronikel dan pabrik HPAL pertama di Indonesia untuk bahan baku baterai kendaraan listrik. Operasi utama meliputi pertambangan bijih nikel dan pengelolaan kawasan industri di Pulau Obi, Maluku Utara. Perseroan memiliki cadangan sekitar 301,9 juta WMT dari empat konsesi pertambangan (PT TBP, PT GPS, PT JMP, PT GTS). Pada 2023, Perseroan mendirikan perusahaan patungan PT KTS (36% saham) untuk ekspansi bisnis.
Bank Dunia memproyeksikan harga nikel turun 10% pada 2024 akibat peningkatan pasokan dari Tiongkok, Indonesia, dan Filipina. Meski demikian, permintaan baterai kendaraan listrik diprediksi meningkat pada 2025. Untuk menghadapi tantangan ini, Perseroan fokus pada efisiensi operasional dan cost leadership, serta memperluas pasar melalui kerja sama strategis dengan Tiongkok.
Perseroan juga melanjutkan ekspansi dengan pembangunan pabrik feronikel PT KPS & PT OSS, serta produksi HPAL PT ONC yang ditargetkan beroperasi April 2024. Dengan kapasitas 125% lebih besar dari PT HPL, fasilitas ini akan menjadi yang terbesar di Indonesia. Untuk memenuhi kebutuhan bahan baku, Perseroan akan mengembangkan tambang PT GPS dan PT JMP.
The Board of Directors effectively managed the Company evidenced by the operational and financial performance achievements for the 2023 financial year. However, we must not be complacent and decelerate our readiness to respond to all possible changes that will occur. Challenges facing the nickel industry will persist and grow more complex.
Donald J Hermanus
Board of Commissioners
The completion of several production capacity expansion projects by subsidiaries and associates on schedule has driven a significant increase in production and sales volume so that the Company managed to maintain growth performance with good profitability amidst the challenges of nickel prices in the global market in 2023.
Roy A Arfandy
Board of Directors