International investors have recognized Indonesia’s hardline stance on developing its domestic capabilities and turned their attention to Indonesian nickel refining, with multiple Chinese companies already investing. A major sticking point in Tesla’s proposal, which aimed to purchase unrefined nickel ore, was Indonesia’s firm commitment to keeping refining processes in Indonesia. Most publicly, Tesla expressed interest in accessing Indonesian nickel for its EV batteries, but no progress towards a deal has been reported. Some American actors have been making moves towards extracting more nickel from Indonesia, but nothing is set in stone yet. These policies have been working and there has been a surge in new refinery projects in Indonesia.
These policies will help Indonesia retain more of the profits from the global nickel trade and lead to Indonesia becoming a major seller of high grade, Class 1 nickel (used in EV batteries). Starting by prohibiting the export of low grade nickel, recent regulations have focused on building a domestic nickel smelting industry and creating more value before the nickel leaves Indonesia. Recognizing the growing importance of nickel, Indonesia, which currently has the world’s largest nickel reserves, has been working to foster and protect its growing nickel industries. Expanding its access to nickel could help the American EV market take back some of its market share and support the US’s broad and growing array of limited and zero-emissions policies. Though the US was an early leader in EVs, it has been falling behind China and Europein recent years.
The recent and increasing use of nickel in electric vehicles (EVs), expected to reach 30% of total nickel consumption, tracks increases in production and sales of electronic vehicles (EVs) in the US and elsewhere. Nickel has long been a critical resource for modern life and, because of its importance for many technologies that are central to the energy transition, demand is only rising.
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