Indonesia rising: Nickel export ban puts chokehold on EU’s steel, China’s EV ambitions
Hans · Jan 17, 2022 11:34 AM
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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.
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.
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.
The only true form of green mobility is public transport.
Over 15 years of experience in automotive, from product planning, to market research, to print and digital media. Garages a 6-cylinder manual RWD but buses to work.