Since January 2020, Indonesia has banned exports of unprocessed nickel ore, a move which caused repercussions to industries in China and Europe, as nickel is critical for the production of stainless steel and EV batteries.
The European Union has retaliated by filing a lawsuit against Indonesia at the World Trade Organization (WTO), saying the export restrictions were unfair and illegal to European steel makers.
Indonesia President Joko Widodo (Jokowi) however, is standing firm and said that for Indonesia to progress, it cannot allow other countries to continue profit from Indonesia’s natural resources at its expense. Indonesia needs to develop its own minerals-processing industry so it can export higher value products.
“Don’t drag us to WTO apparently because we stop exporting nickel ore. We will challenge it through whatever ways,” said Jokowi.
“If we export nickel ore to Europe and other countries, then they can create jobs for their people and we will get nothing,” he added.
Indonesia is the world’s biggest exporter of nickel.
Nickel prices are now trading at its highest in 10 years, leading to concerns that EV battery prices will go up rather than come down.
At the end of last week, prices of nickel on the London Metal Exchange jumped 4.4 percent to USD 22,745 a tonne, the highest since August 2011.
China is also impacted by the ban. China imports more than 80 percent of its nickel from Indonesia, most of it used for the manufacturing of electric vehicle (EV) batteries.
Nickel prices in China also leapt to a record high, with the February contracts on the Shanghai Futures Exchange at over CNY 161,000 (USD 25,350) a tonne.
However, contrary to Western media’s portrayal of China being a predator to smaller countries, China’s response is quite different from Europe. Instead, China is now pumping money into Indonesia.
For example, Zhejiang Huayou Cobalt is partnering with battery maker EVE Energy to invest USD 2.08 billion into a local joint venture PT Huayue Nickel Cobalt.
Separately, Huayou is also part of a consortium led by South Korea’s LG in building a USD 1.2 billion battery plant near Jakarta.
Last month, President Jokowi inaugurated a USD 2.7 billion ferronickel plant by PT Gunbuster Nickel Indonesia, a local joint venture of China's Jiangsu Delong Nickel Industry.
Also read: We have Petronas, Indonesia now has a gov-owned EV battery company
Indonesia’s ban on unprocessed commodity exports won’t stop at just nickel. By the end of this year, it will also ban exports of unprocessed bauxite, a mineral used in the manufacture of aluminum, another material critical in the manufacture of cars.
Of course, not all is green and rosy. Mining is never green, and it’s not any cleaner than drilling for oil, despite what fans of Elon Musk will want you to believe.
As Indonesia doubles down on its mining activities, conflict with villagers who live off the river and the land will intensify. Already, there have been an increase in reports of violent altercations between Indonesian villagers and China-backed mining companies.
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