New OPEC but for countries that produce car battery metals • The Register

Indonesia is looking to use its position as the nickel capital of the world to establish a cartel with other like-minded mining empires, similar to how OPEC joins forces to control the global crude oil market.

This is at a time when the demand for nickel strikes and the world is struggling to move from fossil fuel-based cars to electric vehicles, not to mention at the moment when Europe’s energy crisis is building.

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

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Indonesia is known for following through on its trade threats. In 2020, it banned the export of nickel ore in the hope of boosting refining and processing on its own shores, creating jobs and attracting foreign investment, something strongly contested by its trading partners in the EU, which Wanted raw product for their stainless steel production. The member states hit the archipelago with a complaint from the World Trade Organization in 2021.

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At that time, however, from the point of view of Indonesia, it had achieved its goal: “It looks like we will lose at the WTO, but it is good, the industry has already been built”, said Indonesian President Joko Widodo in an economist forum in Jakarta. in September this year, adding that regardless of the WTO decision in dispute, Indonesia will move forward with plans to impose similar bans on exports of other raw materials.

And here we are.

Nickel is one of the key metals used in the lithium-ion batteries that power many of the automakers’ EVs—with the exception of some, including Tesla, which also use lithium iron phosphate (LFP) batteries to counter high nickel- and protecting cobalt prices.

Of the 3D transition metals (this part here of the periodic table), nickel ensures a higher cell voltage and a continuous voltage profile, with car manufacturers of late actually increasing the percentage of nickel in the cathode of the battery to strengthen the range that the Cars can travel from about 33 percent to 60 percent.

According to commodity consultancy CRU, Indonesia generates 38 percent of the global refined supply of nickel, mostly nickel pig iron, or NPI, which is used to produce stainless steel. Battery-grade metal (and there is an intermediate step in between, nickel matte) is not yet produced in bulk in the country, but it is obviously looking to remedy that.

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 noted that:

And in fact, 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 (unsuitable for batteries) into nickel matte (the intermediate step before batteries produced- grade nickel sulfate).

China’s foreign direct investment in Southeast Asia’s largest economy reportedly reached $1.56 billion between July and September, according to data from Indonesia’s Ministry of Investment, which local business paper SCMP noted was “a steep increase from $595.61 million in the same period last year… [with] more than 1,150 new Chinese investment projects … recorded last quarter … Analysts said most were for downstream projects, refining minerals such as nickel before selling them back to factories in China.

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Unlike OPEC countries, Indonesia relies on China-owned processors. Therefore, while the local industry will be strengthened, it is difficult to see how it will stand out that OPEC-style deal with the other producers of nickel, cobalt, manganese etc. South Africa, which has 80 percent of the world’s manganese reserve, is in a similar position, with much of the extraction and processing done under the direction of foreign-owned companies, including British-owned Anglo American. Nickel mining Russia, cobalt-rich Zimbabwe and the manganese DRC would also be candidates for the “Battery OPEC”. By the end of 2020, however, estimates said the DRC’s mining sector was now 70 percent dominated by Chinese mine owners.

It may be time to take a closer look at what members of the Organization of the Petroleum Exporting Countries already know: you have to own the means of production to pull the levers on prices and supply. ®


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