“Originally harboring dreams of prosperous development for the electric vehicle manufacturing industry, this has instead led to increased coal consumption.” The Wall Street Journal reported on the 4th that Indonesia's ban on raw nickel exports means more smelters will be built domestically, and before the arrival of a more environmentally friendly electric vehicle era, the country may have to first experience a “coal boom.”
Nickel is one of the key materials for electric vehicle batteries, and Indonesia accounts for half of the global nickel supply. In recent years, to enhance and optimize the economic benefits of domestic resources, the Indonesian government has adopted a “downstreaming” policy that only allows important metal resources, including nickel, to be exported in refined metal form. In 2020, the government completely banned nickel exports, hoping to attract foreign investment in Indonesia's metal industry, establish a localized industrial system, connect the nickel industry with the electric vehicle industry, and develop its own EV supply chain.
The Wall Street Journal believes that Indonesia has been trying to turn its valuable mineral resources into a booming electric vehicle manufacturing industry for several years, “smelters from around the world have arrived as expected, but the country is deviating from its original climate goals.” The report states that nickel smelting requires a large amount of energy, and to fill the energy gap, new coal-fired power plants are emerging.
A report released in January by the US environmental group “Climate Rights International” stated that once a nickel-focused industrial park in the Maluku Islands of eastern Indonesia is fully operational, the amount of coal burned will exceed that of Spain or Brazil.
The Wall Street Journal says the “dirty nickel” reputation is threatening Indonesia's coveted economic opportunities. In October last year, nine US senators signed a joint letter opposing a free trade agreement to procure critical minerals from Indonesia, citing environmental and safety concerns. Without a free trade agreement, EV batteries containing large amounts of Indonesian processed nickel would not qualify for major US tax credits. Additionally, cobalt-free lithium iron phosphate batteries, which have already achieved nickel-free status, are gaining favor due to their low cost. All this is reducing the appeal of Indonesian nickel to Western EV manufacturers.
Source: [Global Times Special Correspondent Chen Xin]
