Indonesia unable to fill the gap left by Russian nickel loss April 5, 2022
“As of 1 April 2022, the price was $33,223 per tonne, which is about 36 per cent more than it was on 25 February ($24,361 per tonne).”
“Indonesia has about a third of the world’s nickel ores and is the biggest producer of the metal. In 2020, it produced 0.76 million tonnes of nickel, which is about a third of the global production followed by the Philippines (0.32 million tonnes) and Russia (0.28 million tonnes).
But, a vast majority of Indonesia’s output comprises lower quality Class 2 nickel (NPI), which it exports to China for manufacturing stainless steel.
In terms of Class 1 nickel [required for EV batteries], the McKinsey’s report cited earlier noted, Indonesia produced only 6.8 per cent compared to Russia’s 21.1 per cent (in 2019).
Part of the reason why EV manufacturers have been so dependent on Russia was that after 2012, when China started using NPI for stainless steel, the steel prices came down drastically. This incentivised producers like Indonesia to produce more and more of Class 2 nickel [instead of the Class 1 nickel needed for EV batteries].
Back then, the demand for EVs was not as high as it is today. According to projections by the intergovernmental organisation International Energy Agency (IEA), the ‘global EV stock across all transport modes (excluding two/three-wheelers) expands from over 11 million in 2020 to almost 145 million vehicles by 2030’ — this represents an annual average growth rate of nearly 30 per cent, with EVs estimated to account for about 7 per cent of road vehicles by the start of the next decade.
In this scenario, Indonesia has sensed the opportunity to channel some of its big nickel ores to the EV industry.
According to Isabella Huber, visiting fellow in the Energy and Climate Change Program at the Centre for International and Strategic Studies, Indonesia does have a strategy to tackle this demand.
While Indonesia is richer in a laterite called limonite — a good source for Class 2 nickel production — and does not have such abundant reserves of sulphur ores that are ideal for producing Class 1 nickel, it is devising workarounds to this issue.
In May last year, the country commissioned its first plant to process nickel for use in batteries — a joint venture between China’s Ningbo Lygend and Indonesia’s Harita Group. This project used a process called High Pressure Acid Leach or HPAL to convert laterites to mixed hydroxide precipitate (MHP), which can be further refined to produce Class 1 nickel. In February this year, the China-Indonesia joint venture mentioned earlier made its first batch of MHP.
Indonesia currently has about seven other such projects in the making, but experts caution against being too optimistic at this point.
Speaking to ThePrint, Huber drove home the point that Russia’s Norilsk Nickel currently produces 17 per cent of the world’s Class 1 nickel. ‘The nickel production for the battery supply chain in Indonesia just started in 2021 and could not replace Russian supply. The growing EV industry needs Indonesia’s nickel as an addition, not as a replacement [for Russia’s Class 1 nickel],” she said.”
(bracketed material & emphasis supplied by horace5)
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