With 30% of the World’s Nickel Reserves, Indonesia’s Nickel Mining and Processing is Posed to Soar as the Production of Electric Vehicles Forecast to Grows 500%
Today, nickel is one of the hot commodities in the world. As a vital component to developing electric vehicle batteries, nickel becomes a change agent in energy utilization. The Global Electric Vehicle Market estimates that electric vehicles will grow from 3,269,671 units in 2019 and reach 26,951,318 units in 2030. Increasing demand for electric cars automatically would put the electric vehicle batteries industry on the top of the list. Thus, nickel would be the world’s target.
Indonesia will also participate in the production of electric vehicles by promoting the energy-savvy car and accelerating vehicle batteries’ production. Presidential Regulation Number 55 Year 2019 concerning the Acceleration of the Battery Electric Vehicle Program for Road Transportation supports this acceleration. The Ministry of Industry’s website, based on data compiled by Investor Daily, mentioned the target of electric cars in Indonesia. It should reach 400,000 units in 2025, then increase to 5.7 million units in 2035.
Large capacity battery
Energy Storage System (ESS) came to the fore when Tesla wanted to invest in the ESS sector in Indonesia. ESS, with 100 MW storage, has a much larger capacity than an electric battery. It functions as a stabilizer or a replacement as a peaker generator (peak load support).
ESS is part of the new and renewable energy. According to The International Renewable Energy Agency (Irena) scenario, the source of electricity generation from renewable energy will reach 38% in 2030. It will increase as much as 55% by 2050. The Indonesian government has already set a target to achieve new renewable energy contributions up to 23% by 2025.
Nickel potential in Indonesia
Indonesia has abundant nickel reserves. According to BKPM’s data, Indonesia has 30% of the world’s nickel reserves of 21 million tons. The location of nickel is in East Halmahera in North Maluku, Morowali in Central Sulawesi, Obi Island in North Maluku and Gag Island in Raja Ampat Achipelago.
Laterite nickel ore (limonite and saprolite) dominates the Indonesian nickel industry. Indonesia is rich in these raw materials. It is the reason to build an electric battery industry with NCA (nickel manganese cobalt oxide) and NMC (nickel manganese cobalt oxide) types.
Merdeka recently announced the acquisition HLN with one of the world’s largest nickel-cobalt deposits. Also, Australia’s Nickel Mines has signed a binding definitive agreement with its partner Shanghai Decent Investment (Group) to acquire a 70% equity interest in the Oracle Nickel Project in Indonesia. Four states-owned enterprises, namely PLN, Antam, Inalum, and Pertamina, formed Indonesia Battery Corporation (IBC) to support government’s efforts in increasing the added value of more strategic mineral commodities. IBC is open to establishing partnerships for downstream projects based on profitability. It includes market access capabilities and fund support to develop mineral production from company reserves.
In addition, IBC also participates in nickel downstream by constructing a ferronickel smelter in East Halmahera, called The Haltim. It has a capacity of 13,500 tons of nickel in ferronickel (TNi) per year.
Foreign investor companies
LG Energy Solution has officially signed a memorandum of understanding (MOU) with the Indonesian government regarding constructing an electric vehicle battery project. At the end of 2020, the company committed to investing in the battery industry from upstream to downstream, worth USD9.8 billion or around IDR142 trillion.
The factory plans to integrate the entire battery supply chain, from mining, smelters, precursors, cathodes, cars to recycling facilities, all of which would be built in Indonesia. In the MOU between the government and LG, at least 70% of the nickel used to produce electric car batteries must be processed in Indonesia.
Another investor planning to invest in vehicle batteries is Contemporary Amperex Technology (CATL). This company plans to invest as much as USD5 billion or IDR70 trillion to build a lithium battery factory in Indonesia. The government will ensure that CATL is obliged to process 60% of the nickel used to produce electric batteries in Indonesia.
Investment in nickel processing is one of 17 business sectors that are entitled to fiscal and non-fiscal incentives. Investors who submit their application on Risk-Based Online Single Submission (OSS) would be directly offered fiscal and non-fiscal incentives. BKPM also made business licensing more accessible than before.