Indonesia to become new EV Market

Though Saudi Arabia’s dominance of global energy has long been a drag, at least we could always hope it would end someday. For a while we thought the oil supply would peak soon, breaking the Saudis’ grip, though also reverting us to a donkey-based civilization. Today we think oil demand will peak soon, still relegating Saudi Arabia to the minor leagues, but with electric vehicles instead of donkeys.

Meanwhile, Indonesia is making it easier to tap its rich nickel resources and turn itself into an EV hub. 


Causes: The latest push sees Indonesia tapping into its rich nickel ore reserves to meet the rising demand for metal from electric battery producers. Alongside feeding its stainless steel industry, Indonesia now wants to reserve a portion of its nickel ore for the production of lithium-ion batteries used to power electric vehicles (EVs). The country is the second-largest car producer in Southeast Asia after Thailand and aims to position itself as a global hub for low-carbon vehicles. To provide the resources to develop the EV industry, the government has decided to suspend the exports of nickel ore from January 1, 2020, moving forward the ban by two years.

Effects: Some 80% of the world’s nickel is used to make stainless steel for pipes and household items like fridges, but electric battery makers have been increasingly using the metal to boost their firepower. Rising demand and Indonesia’s export ban announcement, made in September 2019, pushed nickel prices up to their highest level in five years amid concerns that the ban will flip the global market of refined nickel to a deficit. Indonesia is the largest nickel ore producer, supplying a quarter of the global output in 2018. The country is also the world’s biggest exporter of nickel. In 2018 it exported nickel ore for USD 628mn, or 21.5% of the world’s total.

The export ban will create a gap in the global nickel market of some 100,000 tonnes a year, The Wall Street Journal reported in September 2019 citing Timothy Wood-Dow, an analyst at BMO Capital Market. Indonesia said it expedited the ban to reserve ore for its smelting industries of nickel pig iron, stainless steel, and electric vehicle batteries.

What's in it for you: Subsequently, it will create jobs ... it will generate tax income for the country, and new business opportunities, for instance, domestic companies that will export nickel ore.

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