How Indonesia is using Nickel to become the hub for Electric Vehicles

Indonesia has a large reserve of Nickel ore deposit (25% of the world deposit). This metal is used in EV batteries, and can potentially be a big economic driver for Indonesia. To use this opportunity, the Indonesian Government placed a ban on the export of Nickel Ore in 2019 and is now focusing on creating a whole ecosystem for Electric Vehicles. Starting from mining the ore, extraction of Nickel from the ore to creating EV batteries, the Government wants to have the full supply chain at home.

And the ban is showing results with many multinationals knocking at the gates of Indonesia with investment offers. It has helped the domestic automobile industry to come out of its stupor. The pandemic has again pushed back the progress on a slow pace. But with economic activity comes back of track, the sector is expected to bounce back soon with even more focus on green technologies in which EVs will play a big role.

The Indonesian Government has further relaxed lending norms on purchase of electric vehicles on both the demand and supply side. The risk assessment rules have been relaxed for both the buyers and manufacturers of components and batteries of EV. This is expected to give the required liquidity to the automobile sector of Indonesia.

All this has resulted in Indonesia having surplus production of nickel output from which chemicals required for creating batteries are extracted. The Government has set a target of the year 2024 to start the production of Lithium batteries. For this purpose, a deal has been signed between the Government and South Korean LG Chem Ltd and China's Contemporary Amperex Technology Ltd (CATL). The deal includes details about the expected timeline, size of the project and incentives offered by the Government.

The major companies benefiting from the increasing demand of ecologically conscious customers in Eupose are Pacific Rim Cobalt Corp., Honda Motor Company Ltd., Tesla Inc., Panasonic and Toyota Motor Corporation. The lack of technical expertise that is lacking in Indonesia's domestic industry is expected to be corrected by the presence of these large multinational players.

Nickel acts as the battery cathode. It is one of the electrodes responsible for the chemical reaction and the resulting current flow. Currently, Nickel is most used in the process of manufacturing steel. But with EVs expected to take a bigger role, the auto industry is expected to consume more than half of the Grade 1 nickel by 2030. Cars running on such batteries are expected to hit the market by 2025. These mid-size cars will be able to travel 600 kilometres with just 15 minutes of charge. It will also reduce the component size required in the cars while making then non-polluting.

Using Nickel as bait, Indonesia plans to become a big powerhouse in the automobile sector. It will be in direct competition with Thailand in the production of EVs and autonomous vehicles.