Nickel has become increasingly important beyond its traditional use in stainless steel manufacturing as the base metal is a key component in lithium-ion batteries, including the kind used in electric vehicles (EVs).
As the world’s big automakers begin scaling up the production of EVs, nickel and the batteries it goes into are expected to be in high demand. With the largest reserves of nickel deposits in the world, Indonesia is no longer content to simply export its raw ore.
Indonesia wants to take a central position in the value-added links in the EV supply chain — from mining the ore, to refining it, to manufacturing the batteries and eventually to building the cars. And because Indonesia controls the raw input, it turns out it has a lot of leverage.
Ten years ago, Indonesian nickel exports began accelerating in earnest, reaching 64.8 million tons in 2013. The following year, the outgoing Susilo Bambang Yudhoyono administration banned exports of unprocessed ore, with the explicit goal of expanding the downstream industry by forcing companies to refine the ore in local smelters.
Starving global markets of raw nickel turned out to be an effective strategy. From 2014 to 2020, over US$6.5 billion in foreign direct investment has flowed into the construction of nickel smelters and other downstream processing activities in Morowali Regency.
For the rest of this article: https://www.eastasiaforum.org/2021/03/30/indonesia-plays-hardball-with-its-nickel/