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Battery evolution erodes Indonesia's nickel edge
Indonesia may need to find a different strategy to achieve its aspiration of developing a downstream nickel industry, some experts say, as the electric vehicle (EV) industry looks to alternatives to the metal that the country has in abundance.
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Smoke rises on Sept. 21, 2022, from a nickel smelter operated by China’s Virtue Dragon Nickel Industry in Konawe, Southeast Sulawesi. The government has maintained an export ban on nickel ore since January 2020 in order to develop Indonesia’s downstream industry. (AFP/Andry Denisah)
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ndonesia may need to find a different strategy to achieve its aspiration of developing a downstream nickel industry, some experts say, as the electric vehicle (EV) industry looks to alternatives to the metal that the country has in abundance.
Andry Satrio Nugroho, an economist at the Institute for Development of Economics and Finance (INDEF), told The Jakarta Post on Tuesday that rethinking the downstream policy was becoming increasingly important, as the shift from nickel-based EV batteries to lithium iron phosphate (LFP) batteries was expected to gain momentum in the rapidly changing market.
“The first thing we must do is estimate how long it will take to scale up our EV battery production. If we can only do it in 10 years, we will not be able to supply the market and the market will also have changed by then,” he said.
The most common type of cathode in EV batteries today contains nickel, manganese and cobalt (NMC) as well as lithium. Such batteries are commonly referred to as NMC batteries.
The relatively new LFP batteries, meanwhile, have iron cathodes, making them about 20 percent cheaper than NMC batteries to produce. The alternative technology was motived by fluctuations in nickel prices in recent years.
Market research firm Power Technology Research (PTR) projected that LFP batteries would make up more than 50 percent of the market by 2025, beating out NMC batteries, which had around a 70 percent share of the market in 2021.
Despite Indonesia’s extensive nickel reserves, it remains uncertain whether nickel batteries will dominate EV growth in the country, an Institute for Energy Economics and Financial Analysis (IEEFA) report found last year.
