Indonesia ranks first in the world nickel production. The country has 22% of the world’s nickel reserves and annually produces up to 30% of this metal in the world. But it no longer wants to serve as a raw material appendage of developed countries. For some time now, the Indonesian authorities have banned the export of nickel-containing ore and encouraged foreign companies to establish full production cycles of lithium batteries in the country. But until it comes to that, nickel prices will continue to rise.

Indonesia has banned the export of mineral ores after a sharp increase in nickel demand for the production of lithium-containing batteries for electric vehicles. The authorities announced their intention to impose a ban on the export of ore in September 2019, which caused a sharp rise in nickel prices on the London Metal Exchange – up to $ 18 thousand per ton from $ 10 thousand at the beginning of 2019. In January 2020, the ban was documented, but by this time the passions had subsided, and the pandemic by the end of the second quarter brought down the cost of nickel per ton to $ 11 thousand.

Since the summer, when the COVID-19 panic has eased a little, nickel prices have started to rise again, peaking in January this year at $ 19,689 per tonne. But already in March, prices for nickel plunged the Chinese by 20% with the news of a new efficient technology for extracting this metal from ore. Since then, the cost of nickel has hovered at around $ 16 per ton. At the same time, the protective measures of the Indonesian authorities are not going to weaken and prices soon promise to start a new growth.

All this time, Indonesia has been looking for foreign investors to organize a full cycle of battery production in the country. The contract has already been signed with LG Energy Solution. Also in Indonesia, a large national company Indonesia Battery Corp was established to produce batteries. Negotiations are under way with Tesla and Contemporary Amperex Technology (CATL) to help produce batteries locally.

Dynamics of changes in prices for nickel on the London Metal Exchange. Image source: metallicheckiy-portal.ru

BASF and French nickel producer Eramet are considering building a nickel and cobalt processing complex in Indonesia, which will begin operations in the mid-2020s. The facilities will supply 42 thousand tons of nickel and 5 thousand tons of cobalt per year for use in cathode materials for lithium-ion batteries.

All these new enterprises and others, on the construction of which have not yet been agreed, will begin to produce products in four to five years. Obviously, as production increases, the cost of batteries will decrease, but until that time, Indonesia’s policy of restrictions on the export of mineral ores will constantly provoke an increase in prices for pure nickel all over the world.