Forget the Saudis: Here’s a new OPEC for EV battery metals – The Register | CarTailz

Indonesia is trying to use its position as the nickel capital of the world to set up a cartel with other like-minded mining empires, much like OPEC is merging to control the global crude oil market.

This comes at a time when demand for nickel is skyrocketing and the world is struggling to switch from fossil fuel based cars to electric vehicles, not to mention the current energy crisis in Europe.

“I see the merit of establishing OPEC to manage the governance of oil trade and ensure predictability for potential investors and consumers,” Indonesian Investment Minister Bahlil Lahadalia said FT today in an interview. “Indonesia is exploring the possibility of forming a similar governance structure around the minerals we have, including nickel, cobalt and manganese.”

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Indonesia is known to be aware of its trade threats. In 2020, it banned nickel ore exports in hopes of boosting processing and refining on its own shores, creating jobs and attracting foreign investment, a move hotly disputed by its EU trading partners, who wanted the raw product for their stainless steel production . Member states slammed the archipelago in 2021 with a World Trade Organization complaint.

By then, however, it had achieved its goal from an Indonesian perspective: “It looks like we’re going to lose at the WTO, but it’s okay, the industry is already built up,” Indonesian President Joko Widodo said at an economic forum in Jakarta in September this year, adding that regardless of the WTO’s ruling on the dispute, Indonesia will move ahead with its plans to impose similar export bans on other commodities.

And here we are.

Nickel is one of the key metals used in the lithium-ion batteries that power many automakers’ electric vehicles — with the exception of a select few, including Tesla, which also use lithium-iron-phosphate (LFP) batteries to power themselves to hedge against high nickel and cobalt prices.

Of the 3D transition metals (that nugget here on the periodic table), nickel provides higher cell voltage and a continuous voltage profile, with automakers lately even increasing the nickel content in the battery’s cathode to increase car range by around 33 percent up to 60 percent.

According to commodities consultancy CRU, Indonesia produces 38 percent of the world’s refined supply of nickel, mostly nickel pig iron, or NPI, which is used to make stainless steel. Battery-grade metal (and there’s an intermediate step in between, matte nickel) isn’t yet produced in large quantities in the country, but efforts are obviously being made to remedy it.

In the first seven months of 2022, the archipelago’s mines increased production by 41 percent year-on-year, according to the International Nickel Study Group, which also found that:

Indeed, Chinese companies – including metals giant Tsingshan – have invested heavily in Indonesian nickel, with new plants springing up across the island of Sulawesi to convert nickel pig iron (not suitable for batteries) into nickel matte (the intermediate step before battery nickel sulphate is made).

Foreign direct investment from China into Southeast Asia’s largest economy reportedly reached US$1.56 billion between July and September, according to data from the Indonesian Investment Ministry, which local business newspaper SCMP described as a “steep rise from US$595.61 million in the same period of the previous year”. … [with] More than 1,150 new Chinese investment projects… were recorded in the last quarter… Analysts said most are for downstream projects, where minerals like nickel are refined before being sold back to factories in China.”

Unlike the OPEC countries, Indonesia relies on Chinese-owned processing companies. So while local industry is boosted, it’s hard to see how it will turn out to be OPEC-style deals being made with the other producers of nickel, cobalt, manganese, etc. South Africa, which holds 80 percent of the world’s manganese reserves, is in a crisis-like position, with much of its extraction and processing being run by foreign-owned companies, including British Anglo Americans. Nickel-mining Russia, cobalt-rich Zimbabwe and the manganese Democratic Republic of Congo would also be candidates for “battery OPEC.” However, by the end of 2020, the DRC’s mining sector was estimated to be 70 percent dominated by Chinese mine owners.

It might be time to take a closer look at what members of the Organization of Petroleum Exporting Countries already know: they must own the means of production to pull the levers on prices and supplies. ®

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