Indonesia is on track to become the world’s nickel capital with new projects potentially lifting the country’s share of the important stainless steel and battery metal ingredient to a whopping 60% of global output later this decade.
Much of the planned investment is linked to Chinese companies keen to cement their grip on stainless steel production and to meet fast growing demand for batteries which require a range of new-energy metals such as nickel, lithium, cobalt and copper.
The pace of growth in the Indonesia nickel sector can best be measured by an investment bank forecast that the country could lift its share of worldwide nickel production from 28% to 60% inside the next eight years.
Macquarie, an Australian-based bank, described the plans for Indonesia nickel as a flood with a series of “mega” projects under construction, announced, or in the planning stage.
The latest proposed development, from PT Huayou Nickel Cobalt (Indonesia), is for a project at Weda Bay in the Halmahera district of North Maluku which plans to invest $2.08 billion on a project producing 120,000 tons of nickel a year, plus 15,000 tons of cobalt.
Massive And Cheap
Macquarie described the project, which involves a number of Chinese companies, as both massive and incredibly cheap in terms of capital outlay.
“Our database of Indonesia high-pressure, acid-leach (nickel) projects for batteries now contains eight announced projects with a combined capacity of almost 450,000 tons a year of nickel and 50,000 tons of cobalt,” Macquarie said.
The new projects are in addition to projects which will expand the production of a another material rich in nickel called nickel pig iron.
“By 2028, we are projecting Indonesian (nickel) production to exceed total 2020 world production of 2.5 million tons and for Indonesia production to rise from 28% of world production to almost 60%,” Macquarie said.
Big Win For the Indonesian Government
For the Indonesia Government the rising tide of processed and partly processed nickel is a significant victory which has resulted from forcing mining companies to stop exporting raw ore ore and invest in value-added processing.
The first crackdown on ore exports in 2014 was relaxed in 2017 and reintroduced last year in a process which has worked by forcing investment which has dramatically expanded the value of Indonesia’s nickel exports.
“Even though nickel volumes have yet to surpass the highest levels of 2013, export revenues are now more than triple those of 2013 due to the move in exports up the value chain,” Macquarie said.
The bank said the pace at which new capacity is being built is “staggering”. Its latest analysis points to installed capacity reaching 1.788 million tons of nickel a year by the end of this year compared with total production last year of 600,000 tons of metal.
But the Indonesian nickel rush could be just what the world needs as governments encourage the shift to electric vehicles with their nickel-heavy batteries.
“What we cannot emphasize enough is that the world does need this level of (Indonesian) production,” the bank said.
Macquarie expects global demand for nickel in 2030 to be two million tons above 2020 demand with more than half of the increase coming from the battery sector.