Indonesia has the biggest reserves of nickel ore on this planet, positioned primarily on or close to the island of Sulawesi. For a very long time, the unprocessed ore has been mined in Indonesia and exported to different international locations to be refined and used within the manufacturing of chrome steel. However over the previous couple of years nickel has acquired new foreign money as a commodity and as a bargaining chip for Indonesia’s industrialization efforts.
Transitioning away from fossil fuels and towards clear vitality would require batteries. Numerous them. Lithium-ion batteries, one of the crucial generally used sorts, are manufactured utilizing nickel as a key enter. This implies demand for nickel is predicted to rise as clear vitality transitions speed up around the globe.
As a part of efforts to encourage downstream industrialization, a number of years in the past Indonesia banned the export of unprocessed nickel ore. The aim of this was to drive corporations to refine the ore in Indonesia and increase funding in home smelters. If we decide by that ambition alone it has been quite successful.
For the reason that export ban was enacted, billions of {dollars} have poured into Indonesian nickel smelters and related industrial parks. We all know it’s working as a result of exports of refined nickel have exploded lately, to the purpose that there’s now a world provide glut that’s placing some international nickel miners out of business.
Why did all of this occur? Exporting the unprocessed ore meant that many of the worth added in the course of the processing stage was not being captured in Indonesia. Processing nickel domestically means extra of the worth that’s created stays in Indonesia. And so as to guarantee Indonesian companies, and never simply international companies working in Indonesia, are concerned on this worth creation the state has been trying to develop its footprint within the sector.
Antam is an Indonesian mining firm with pursuits in gold and nickel. It’s 65 p.c owned by the state by a holding firm known as MIND ID. This holding firm was created to handle state-owned mining property in a coordinated manner in order to higher serve the nationwide and strategic pursuits of the state. Unsurprisingly, the nickel ore ban has been good for Antam’s enterprise.
In 2018, earlier than the ban was enacted, Antam’s revenue was round $1.6 billion (utilizing a continuing change charge of 16,000 rupiah to the greenback), 43 p.c of which was export earnings. By 2023, income had grown to $2.6 billion, solely 14 p.c of which got here from exports. Nickel ore has develop into an more and more essential a part of Antam’s operations with the miner producing 13.5 million moist metric tonnes final 12 months, up from 1.7 million in 2019.
Antam is producing much more nickel ore than it was only a few years in the past, and nearly all of it’s being absorbed domestically. This means that the export ban is attaining considered one of its principal goals. However the long-term aim was by no means restricted to nickel ore, it was about shifting into extra priceless hyperlinks on the nickel provide chain together with smelting and related industrial actions. We’re seeing that course of now begin to play out.
Whereas the export ban accelerated funding in nickel smelters, a lot of them are majority owned by international companies, significantly from China. It seems Antam is now eyeing a much bigger position for itself on this a part of the worth chain, which supplies helpful context for Chief Govt Nicolas Kanter’s announcement last month that the state-owned miner can be buying a smelter from China’s Tsingshan Holding Group. Tsingshan has been a serious investor in Indonesia’s downstream nickel sector. In a separate deal, Antam is partnering with Chinese language agency Ningbo Up to date Brunp Lygend to develop two further nickel processing services.
Antam at the moment produces ferronickel, a sort of alloy used to make chrome steel, but it surely has been held again by capability constraints. Its ferronickel smelters have been working at or close to 100% capability for the final a number of years, which means its present services can’t produce sufficient refined nickel to fulfill present demand.
These latest bulletins sign that Antam desires to proceed shifting up and increasing its holdings within the nickel worth chain by including extra processing capability by co-development in addition to acquisition. The probably finish aim isn’t just to provide extra ferronickel, but in addition to start out producing extra highly-refined battery-grade nickel.
Indonesia’s export ban uncorked a giant funding growth within the home nickel worth chain, with billions of {dollars} flowing into smelters and industrial parks. Now Antam is trying to insert itself into more and more strategic and priceless hyperlinks in that chain so as to train better management over the manufacturing of refined nickel merchandise like ferronickel and nickel matte. It’s nonetheless too early to say whether or not Indonesia’s nickel gambit will obtain all of its targets, however Antam buying and creating extra smelter capability is a key a part of that long-term imaginative and prescient.
