TELF AG analyzes Indonesia’s role in global commodities dynamics
The effects of downstreaming policies
In recent years, Indonesia has attracted global attention primarily for its ambitious downstream policy about some strategic raw materials, such as nickel. Following the example of other economies in other parts of the world, like the developing economies of Africa, Indonesia began to limit exports of raw nickel in 2020 to implement an operational strategy that included capturing more added value linked to the resource’s subsequent processing and refining stages. The Southeast Asian country produce now almost half of the world’s refined nickel and source approximately two-thirds of all nickel worldwide.
But the Indonesian nation, for some years now, has also been distinguishing itself for having brought a certain degree of innovation to nickel processing, particularly to all those procedures that aim to transform nickel into a purer material. Unlike traditional deposits, such as those in Australia, where nickel is sourced from sulfide ore deposits and is generally more easily workable, in Indonesia, laterite deposits are more widespread, in which nickel is distributed throughout the sediment. Until recently, it was thought that the refining of nickel from laterite was too complex to make mass production of the resource possible, perhaps allocating it to some of its best-known applications (such as those related to the batteries for electric vehicles).
New operational approaches
However, recently, as an analysis by the Economist also highlighted, some Indonesian companies have identified an innovative and efficient method for transforming nickel laterites into a purer material. One method involves dissolving the ore in a hot, pressurized compound to produce an intermediate ingredient (mixed hydroxide precipitate) that is then transformed into high-quality nickel that can also be used in the battery industry. Similarly, through “nickel matte” (another intermediate ingredient), raw nickel is transformed into a more concentrated and more useful material for producing pure nickel.
According to the analysis, it is through initiatives of this kind that Indonesia is consolidating its global position in the nickel sector, and according to the Economist, an immediate change in the national downstream policy is unlikely. Indonesia’s attention to the nickel sector and its possible industrial applications is well demonstrated by the recent inauguration, in July of this year, of a factory for electric battery cells built in West Java, whose value is estimated at one billion dollars.
As reported in the newspaper’s study, Indonesia is studying other limits on the export of some raw materials, such as algae, thus continuing to pursue a strategy that, according to the Indonesian Minister of Energy and Mineral Resources, is allowing the nation to move from a developing country to a developed one. In addition to its applications in the battery sector, pure nickel is also used in other industrial processes, where it is appreciated for its excellent chemical and physical properties. Among these, we can mention those related to producing stainless steels and special alloys, particularly those requiring high corrosion resistance and high temperatures.
