Blazing Furnace of Indonesia’s China Backed Nickel Downstream Industry

  • The nickel downstream industry is heating up in the nickel-richest Islands, Sulawesi, and North Maluku, turning Indonesia into one of the biggest nickel pig iron, ferronickel, and stainless steel exporter. Indonesia's mine nickel production increased by 54 percent year-on-year to 1.6 million metric tons in 2022. 
  • Indonesia struggles to unlock more EV battery-related investment as the auto industry move on from nickel to nickel-free battery and build facilities in other promising EV market in Southeast Asia. A push is underway to make nickel mining and processing greener to prevent nickel battery early sunset, while EV's cash subsidy just made official.
  • A collaboration with the world's biggest lithium producer Australia is now Indonesia's priority to achieve its battery powerhouse ambition. Meanwhile, the Philippines, the second-largest nickel producer, rejected another strategic idea to build an OPEC-like nickel alliance to control the nickel supply. 
  • Problems come in line with the rise of the nickel downstream industry: Illegal mining allegedly involving high officials and politicians, local and foreign workers clashes, to environmental and social damage.   
  • Lack of exploration amid busy furnaces leads to nickel shortage warnings. Nickel industry players remind the government that nickel reserves will drop sharply as almost 200 furnaces have operated, and many more will follow in the next couple of years. Indonesia is considering a moratorium on new furnaces and a progressive export tax.   
  • China invests the most in Indonesia's nickel downstream industry, with the world's biggest battery producer, China's private company CATL leading battery production. And the world's biggest steel producer, China's state-owned Bauwo ready to lead stainless steel production with Tsingshan. While the leading Indian stainless steel company Jindal is ready to blend in a China-filled ecosystem.
  • Nickel future demands: a higher demand for stainless steel production could be expected as there is a chance of this corrosion-resistant material applications in more vehicle parts. Meanwhile, the potential demand for EV battery production softened.

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