Indonesia is the world's largest producer of processed nickel and home to 23.7% of the world's nickel reserves. Before demand for electric vehicles (EV) and EV batteries surged, about 70% of the global demand for nickel was consumed by the stainless steel sector in the form of nickel pig iron (NPI), according to S&P Global. In order to promote the domestic processing industry, Indonesia first imposed an export ban on unprocessed mineral ores in 2014, including nickel.
A DIGITIMES Asia recent report, "2022 EV battery value-chain outlook in Asia," provides a comprehensive overview of the Indonesia EV battery industry. Below is the summary of the report.
It was not up until 2020 that demand for EV batteries picked up, and nickel is a critical material in producing ternary batteries. In the same year, upon revising its mining laws, Indonesia has kept its export ban in place while allowing those building smelting facilities to export unprocessed ores for the next three years, according to Reuters. The demand for nickel for making battery-grade materials is expected to rise from 5% to 35% of the total demand for nickel by the end of the 2020s, according to S&P Global.
While there are many nickel-processing suppliers in Indonesia, most of the smelters are for steel production and few of them can produce battery-grade nickel materials. The nickel industry in Indonesia is still highly focused on feeding the global demand for stainless steel, but the production of first-grade nickel, which can be used in battery cathodes, is rising.
Above all, a great number of the smelters in Indonesia are funded by Chinese firms. The Morowali industrial park (IMIP), where most nickel-processing activities are located, was co-developed by a subsidiary of China-based Tsingshan Holding Group and others including two Indonesian companies, Bintangdelapan Group and Sulawesi Mining Investment in 2015. In 2017, Tsingshan Holding built another industrial park IWIP with Huayou Group and Zhenshi Group in Weda Bay, North Maluku.
Thanks to its rich nickel reserves, the Indonesian government said it is turning Indonesia into a battery producer and established the first state-owned battery manufacturer Indonesia Battery Corporation (IBC or known as PT Industri Baterai Indonesia (IBI)) in 2021. But due to the lack of infrastructure and technologies, most of the processing activities and battery production are expected to rely on foreign investment, notably from China.
According to Nikkei Asia's reporting in February 2022, Chinese firms Zhejiang Huayou Cobalt, Eve Energy and Guangdong Brunp Recycling Technology invested nearly US$4 billion into the county in 2021 alone. Given the rise of demand for EV batteries, Indonesia began building its first EV battery plant in Karawang, West Java in September 2021 with investment from Hyundai and LGES. The Indonesian government aimed to have 53 nickel smelters in operation by 2024.
Indonesia's policy on nickel and EV batteries
Policies | |
Indonesia battery policy | Events |
1. Ban exports of unprocessed ores since 2014 | |
2. Set up PT Industri Baterai Indonesia (Indonesia Battery Corporation, IBC) in 2021 | |
3. Build a total capacity of 140GWh by 2030 | |
4. 50GWh of battery is for exports | |
5. Bring investment in battery-making to US$33 billion by 2033 | |
Compiled by DIGITIMES February 2022
To get the full content of this article, you may download the report via "2022 EV battery value-chain outlook in Asia."
Editor note: DIGITIMES Asia just released a series of industry reports, focusing on the "2022 EV battery value-chain outlook in Asia." The reports are divided into 3 parts – Overview of East and Northeast Asia EV battery supply chains, Southeast Asia, India EV battery and material supply chains, and EV battery tech trends and promising startups. These member-exclusive reports are now available for EV Weekly Subscribers.
