For the past several decades, metal companies have created stainless steel out of nickel mined from the Philippines or Russia. These are usually molten at temperatures reaching 2,900 degrees. However, supply is scarce, and Western auto and battery makers are eyeing Indonesian nickel.
Huge Demand for Indonesian Nickel
Nickel is a major component in manufacturing a majority of electric vehicle batteries. Due to shortened supply, metal producers are now turning to Indonesia as a new supplier. This Asian country has massive reserves of formerly disparaged low-grade type nickel, including new smelting systems.
The burgeoning of Indonesia as the world’s most significant source of nickel amplified supplies and lowered prices. However, it also fostered complaints among environmentalists and Western mining companies. The refining systems utilized in Indonesia exhaust too much energy and generate too much waste. Additionally, a few US policymakers consider that China has so much authority in the country.
Western car and battery firms have run out of possible nickel suppliers. In search of battery metals, Volkswagen, Ford, Vale, and LG Energy Solution already disclosed billions of dollars in battery and nickel deals in Indonesia for the past years. The said deals are sufficient to produce millions of electric vehicle batteries every year made with nickel.
Postponing of Nickel Export Levy
Indonesia is postponing a tax on nickel product exports while working to establish a price index to alleviate volatility attached to the Metal Exchange (LME) benchmark. The government is considering instituting a nickel price index by the end of 2023. It must be implemented before setting up an export levy for the nickel.
“By the end of the year, the index will be created. We are still asking for the proposal from each index provider. We will see who has the best. Since the LME incident last year … we had a lot of feedback from smelters,” said Septian Hario Seto, a senior official with the investment coordinating ministry.
He added that the index is necessary because the price cut between the LME refined nickel price and the market price of nickel pig iron is extremely volatile. The index could likewise involve mixed hydroxide precipitate and probably nickel matte.
Billions of Investment in Battery Chain
Indonesia could receive $32 billion of investment in battery chain projects by 2026. The country has an abundant source of nickel used for making EV batteries. The government wants more venture capital in Indonesian nickel downstream contingents to boost economic growth.
The Kalimantan region could acquire $12.35 billion in investment, while North Maluku can draw $9.78 billion. On the other hand, Sulawesi could expect an accumulation of $9.84 billion in battery supply chain projects.
The government proclaimed North Kalimantan industrial park as “green,” with plans to use hydropower to power activities. This move will encourage investment from investors who are conscious of emissions.
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