Nickel is the new gold . . .
Indonesia, which has the world’s largest nickel reserves, at around 21 million metric tonnes, is looking to convert this lucrative resource into finished products. With the rising demand for electric vehicles (EVs), nickel, the key component of EV batteries, is becoming a hot commodity. For Indonesia, exporting nickel ore would be the quickest and easiest way to profit from this global ‘nickel rush.’ However, the ore is significantly less valuable than the batteries themselves, and moving nickel up the domestic value chain is imperative to boosting the country’s profit margins through value-added products and creating more jobs.
Courting partners . . .
Last year, the Indonesian government established the state-owned Indonesia Battery Corporation (IBC) to develop an EV battery supply chain, with operations spanning the mining of nickel ore to the production of EV batteries. The total investment needed for this endeavour will be C$19 billion, obtained through partnerships/joint ventures between IBC and other companies. To date, China’s Contemporary Amperex Technology and South Korea’s LG Energy Solution have indicated their plans to invest C$19 billion and partner with IBC in this project. The Indonesian government is still actively looking for investors and met with Tesla CEO Elon Musk last week to discuss Tesla’s plans to develop an EV battery factory in Indonesia.
EV industry not a panacea for zero-carbon . . .
While an EV produces no tailpipe emissions, it still has a significant carbon footprint due to its production process and the electricity needed to charge it, usually powered by fossil fuels. To offset the carbon footprint, Indonesia is looking to transition fully to clean energy, as laid out in its newly-developed National Grand Energy Strategy (GSEN). According to the GSEN, by 2060, 60 per cent of Indonesia’s power generation will come from solar power, 15 per cent from hydropower, and 25 per cent from other clean energy sources. This transformation, however, comes with a hefty price tag of C$64 billion and requires technology transfers from countries that have experience in developing clean energy. As a global leader in clean energy, especially hydropower, Canada should keep an eye on this promising clean energy development opportunity.
- Jakarta Post: Indonesian delegation’s discussion with Tesla on EV battery investment
- Nikkei Asia: LG to build EV battery supply chain in Indonesia
- South China Morning Post: CATL’s investment in Indonesia’s battery project