ResponsiBank Indonesia considers the government’s plan to establish the Mineral and Strategic Commodities Exchange (BMKS) an important foundation for developing an Indonesia Reference Price for major export commodities. However, ResponsiBank Indonesia emphasizes that Indonesia must not merely become a price setter, but also a standard setter for sustainable critical mineral governance.
“If Indonesia wants to become a price setter, the question is not only who determines the price, but also what kind of minerals are being priced,” said Victoria Fanggidae, Coordinator of the ResponsiBank Indonesia Coalition and Executive Director of PRAKARSA, in a press statement.
She argued that Indonesia must leverage its strategic position to help establish standards for how minerals are responsibly mined, processed, financed, and traded, in order to minimize environmental and social risks.
The urgency of this approach is evident across Indonesia’s mineral supply chains. Research conducted by The PRAKARSA together with WALHI Bangka Belitung, as part of ResponsiBank Indonesia’s work in the tin sector in 2026, identified practices of “supply chain laundering.” These practices demonstrate how tin from illegal mining operations and mining activities that do not meet adequate environmental standards can enter formal supply chains. Bangka Belitung accounts for nearly 20% of the world’s tin supply.
“Large-scale production, exports, and state revenues are not sufficient measures of success. We also need to examine who benefits and who bears the social and environmental costs. Communities living around mining areas cannot simply be described as bearing the externalities without addressing the sacrifices they make as a result of mining activities,” said Ari Wibowo, Senior Researcher at The PRAKARSA.
The research also found that audits and certification systems that rely too heavily on administrative compliance may fail to detect the mixing of illegally sourced minerals into formal supply chains. Therefore, transparency within the exchange must go beyond transaction transparency to include supply-chain transparency and corporate accountability. Conditions on the ground also show that 12,607 former tin-mining pits remain unreclaimed, covering approximately 15,579.7 hectares.
Mineral Exchange Needs a Mineral Origin Traceability System
Minerals traded through the exchange should be subject to a traceability system that enables their origins to be traced back to mining sites and processing facilities. The system should also link information on mineral origins with operational legality and compliance with environmental, social, labor, and human rights standards.
“Traceability should not stop at asking which mine the mineral came from. The system must also be able to show whether environmental, social, and human rights standards have been met,” said Ari.
ResponsiBank believes that the Mineral and Strategic Commodities Exchange should implement environmental and social safeguards as prerequisites for commodities and business actors participating in the exchange. These standards should cover mineral traceability, environmental and worker protection, the rights of affected communities, grievance mechanisms, as well as human rights and environmental due diligence.
Here, the role of the Financial Services Authority (OJK) is highly strategic. OJK will not only oversee the exchange but also regulate financial institutions that finance mining companies, smelters, and other companies across the mineral value chain.
“It is not enough for minerals entering the exchange to be required to meet certain standards while banks and financial institutions can still finance business activities that fail to meet those same standards. Trading standards and financing standards must go hand in hand,” Ari said.
The financing standards in question should not stop at environmental and social due diligence. Financial institutions financing mining companies, smelters, and mineral value chains should also require beneficial ownership disclosure and transparency regarding companies’ payments to the state.
This should include royalties, non-tax state revenues (PNBP), and other tax obligations as part of financing due diligence. Without such requirements, financing can continue to flow to companies that conceal their actual ownership structures or lack transparency regarding their contributions to state revenues, even if they formally meet environmental and social standards on paper.
“We must not allow profit shifting and tax avoidance to take place behind the scenes,” said Aryanto Nugroho, National Coordinator of Publish What You Pay (PWYP) Indonesia, a member of the ResponsiBank Indonesia Coalition.
Ensuring Justice
In addition, responsible mineral governance standards must ensure justice in land control and use (land use justice). Mining areas and smelters often overlap with Indigenous lands and territories, agricultural land, and areas that sustain local livelihoods. The principle of Free, Prior and Informed Consent (FPIC) should be a requirement, not an afterthought, before mining operations and processing facilities are granted access to land.
Aryanto said that the impacts of mining are also not experienced equally: women, persons with disabilities, and other vulnerable groups are often positioned merely as affected parties rather than as decision-makers.
“Therefore, grievance mechanisms, compensation, and post-mining restoration must be designed to be gender-responsive and disability-inclusive, with impact and benefit-distribution data disaggregated by gender and other vulnerable groups,” Aryanto said.
ResponsiBank Indonesia calls for the Mineral and Strategic Commodities Exchange to ensure five key elements:
- Traceability of minerals from mining sites through to trading;
- Strong environmental and social safeguards;
- Mandatory responsible sourcing and due diligence;
- Transparency of beneficial ownership and supply chains; and
- Integration of these standards into financial institutions’ financing policies.
“An Indonesia Reference Price must be backed by an Indonesia Responsible Mineral Standard. Without strong traceability, due diligence, and environmental and social standards, we are merely shifting the location where prices are determined without improving supply-chain governance,” said Victoria.
Source: Kata Data