Nickel prices have shot up to a six-year high on the back of rising demand expectations from the EV sector (click here for an interactive chart on nickel prices). On Friday, the metal was trading at $18,599/t on the LME, near what analysts believe to be a critical threshold for new supply investment.
In a report prepared by Roskill on behalf of the European Commission, global nickel demand is expected to reach 2.6 million tonnes in 20 years, which is significantly higher than the 92,000 tonnes recorded last year.
Indonesia has been strengthening its position in the Li-ion battery supply chain through several large international investments
Indonesia has been strengthening its position in the Li-ion battery supply chain through several large international investments. At the end of 2020, LG Chem signed a memorandum of understanding for an EV battery manufacturing deal with the government reportedly worth $9.8 billion.
News of a potential tie-up with Tesla follows an announcement last week by the Indonesian government that it would not permit deep sea tailings placement (DSTP) as a form of tailings disposal at any of the battery-grade intermediate projects under construction. These projects must subsequently find alternative methods of safe on-land storage methods.
According to Roskill, this is perhaps in response to pressure from western OEMs including Tesla, which place ESG high up their raw material procurement criteria. In a post-earnings call last July, Tesla boss Elon Musk pleaded for nickel that has been sourced “efficiently and in an environmentally sensitive way.”
As well as targeting the Li-ion battery market, Indonesia has also been successful in attracting investment for a fully integrated stainless steel supply chain.
The Southeast Asian nation is also the leading producer of nickel pig iron (NPI), a raw material used in making stainless steel. NPI that is not consumed domestically is being increasingly exported to China, the world’s top consumer.
Chinese imports of NPI from Indonesia doubled year-on-year in 2020 as expansions from greenfield and brownfield capacity in Indonesia were brought online, Roskill added.
