Reuters – China built Indonesia’s nickel boom but could yet bust it – battery materials
LONDON, Dec 1 (Reuters) – China financed and built Indonesia’s nickel industry, transforming the country into the world’s largest producer in the space of a decade.
But now China is not so sure it needs all that nickel. Chinese electric vehicle manufacturers are pivoting away from nickel-chemistry batteries.
Ever more of what Indonesia digs out of the ground is destined not for an EV battery plant but rather a London Metal Exchange warehouse.
Global exchange inventories of refined nickel have ballooned from 54,000 metric tons in January 2023 to 366,000 tons, equivalent to around 10% of global usage last year.
The weight of surplus has tamed nickel’s wildness, which peaked with the suspension of LME trading in 2022. Prices have spent most of this year churning at rock-bottom levels.
Indonesia’s nickel sector is still growing as the country pursues its ambition of becoming an EV powerhouse, but there is a very real risk it has bet too much on a battery metal that its biggest customer is growing cold on.
YOU WANT MORE NICKEL?
“Please mine more nickel,” was Elon Musk’s rallying call to the mining industry back in 2020. The head of Tesla (TSLA.O), was concerned there wouldn’t be enough of the stuff to meet what was expected to be explosive demand growth from the EV battery sector.
Indonesia and its Chinese operators duly obliged.
The country’s mined production surged from 780,000 tons in 2020 to 2.3 million tons in 2024. Its share of global supply rose from 30% to 70% over the same period.
The first wave of Chinese investment in Indonesia’s giant nickel reserves was all about stainless steel, still the largest consuming sector for nickel.
Huge amounts of ore were shipped to China and then, when Indonesia banned the export of unprocessed ore in 2020, the trade shifted to nickel pig iron.
The second wave has been all about nickel as a battery metal. Spurred on by the Indonesian government to build downstream processing capacity, Indonesian operators now churn out a range of products such as matte, mixed hydroxide and even refined metal.
Most of the intermediates are sent to China for further processing into nickel sulphate, a form that is used in EV batteries.
BATTERY REVOLUTION
Well, that was the plan anyway.
The problem is that nickel has fallen out of favour with Chinese EV manufacturers, who are increasingly using batteries without any nickel or other high-price inputs such as cobalt.
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Reuters – China built Indonesia’s nickel boom but could yet bust it – battery materials, source
