(Bloomberg) — Obi, among hundreds of scattered spice islands in the Maluku archipelago, is an unlikely spot for a metal market convulsion. Only the northern part of this island gets power from the state utility. It’s home mostly to fishermen and coconut farmers.
Harita Nickel’s sprawling complex of processing machinery and conveyor belts tells a different story. One of a new breed of nickel producers, backed by Chinese know-how and cash, it’s using the latest generation of a method known as high-pressure acid leaching, or HPAL, to turn Indonesia’s low-grade ore into metal fit to power a Tesla car.
Success would have dramatic implications far beyond the Southeast Asian nation, where President Joko Widodo has put the world’s largest nickel reserves at the forefront of an ambitious plan to transform the economy into a key player in the electric-vehicle supply chain.
The new HPAL projects, and the surge of inexpensive metal from a country whose deposits have long been unloved by major producers, could push the market into oversupply. Within two years, Indonesia could supply 65% of the world’s nickel, up from 30% in 2020, Macquarie Group Ltd. estimates.
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