Indonesia a tycoon in the production of electric cars? It has huge deposits of nickel


Mikes-Photography/Pixabay In just the last three years, Indonesia has signed over a dozen contracts worth more than $15 billion for the production of batteries and electric vehicles in the country with manufacturers such as Hyundai Motor, LG Group and Foxconn. Next in line is Tesla. Indonesian President Joko Widodo convinces Elon Musk to produce electric vehicles and batteries in the vast archipelago of Southeast Asia. Widodo said he even offered Tesla a nickel mining concession and tax breaks for investments in the country, and he is confident the deal will be finalized. Tesla has yet to confirm these plans. The company has so far signed contracts worth about $5 billion to buy nickel from local companies. According to the US Geological Survey, Indonesia has a total of 21 million tons of proven nickel reserves. That’s almost a quarter of the world’s reserves. The country, according to the International Nickel Study Group, mined 1.4 million tons of nickel between January and November last year. This is much more than the second largest producer, the Philippines, which produced 290,000 tonnes. tonnes in the same period and more than double Indonesia’s production of 606,000 in 2018. tone. Indonesia banned the export of nickel ore in 2020 but allowed the export of higher value nickel products – thus forcing companies to process and produce domestically. As a result, exports of processed nickel from Indonesia increased from about $1 billion in 2015 to over $30 billion in 2022. The International Energy Agency predicts that Indonesia will account for half of the global increase in nickel production between 2021 and 2025, due to the increase demand for electric vehicles. Up to 40 kg of nickel is needed to produce each such vehicle. Experts emphasize that the Indonesian government is building an entire value chain for servicing electric vehicle factories. Widodo did not provide a timeline for export growth, but said Indonesia intends to establish an integrated electric vehicle battery supply chain by 2027. Indonesia also plans to ban the export of copper ore and bauxite, both of which are used in the production of electric vehicles. The nickel export ban was challenged at the World Trade Organization by the European Union. The WTO ruled in favor of the EU, but Indonesia appealed. However, Indonesia’s current successes have already prompted other countries to follow suit. The Philippines plans to tax nickel ore exports to encourage miners to invest in processing. One of the areas of interest for potential investors in Indonesia is the impact of the nickel mining industry on the environment and the use of coal in Indonesia for energy production. The process of adapting nickel for electric vehicle batteries has a large carbon footprint and creates waste that environmentalists say could end up in the ocean. Still, global automakers are investing or sourcing in Indonesia due to limited alternatives and growing demand, analysts say. Reuter, KR

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