Several Western countries have put together economic sanctions on Russia after the country continues to launch attacks on Ukraine. With the economic sanctions received by Russia, Indonesia is affected by the profit, how can that be?
The economic sanctions that Russia received prevented them from exporting Nickel. This will be an opportunity for Indonesian nickel producers to enter the US and Europe.
Executive Director of the Center of Economics and Law Studies (CELIOS) Bhima Yudhistira said the US would look for sources of nickel imports to replace Russia. Indonesia, as the largest nickel producer, can certainly take advantage of this momentum.
“Economic sanctions provide an opportunity for nickel producers from Indonesia to penetrate the market left by Russia. Russia’s nickel imports to the US are recorded at US$118 million per year, so US electronics and automotive companies will look for other nickel sources,” said Bhima, Monday (14/14). 3).
Economic sanctions imposed by the US and western countries will make it difficult for Russia to export nickel. This is because some countries have blocked Russia from the SWIFT international payment system and several mining companies have left Russia.
“Investment costs for nickel mining in Russia have also decreased drastically after companies from Europe withdrew. Logistics ships transporting nickel from Russia were also significantly reduced due to rising insurance costs, especially shipping through war zones,” said Bhima.
Furthermore, Russia could export nickel through China. However, the route requires Russia to export nickel to China first before shipping to other countries.
Seeing this situation, RI’s opportunity to increase its market share in the US and Europe is very large. However, there are several challenges for Indonesia to sell nickel to the US and Europe.
According to him, the first problem is that some nickel producers in Indonesia are considered not to meet the Environmental, Social, and Governance (ESG) standards. This is different from Australia, where most of its nickel mines have complied with ESG standards.
Second, he assessed that the cost of shipping logistics in Indonesia is still relatively high, which is 23.5 percent of GDP. This will affect competitiveness with other countries.
Third, not all the quality of nickel produced by Indonesia can replace the quality of nickel from Russia. Although it can be said that Indonesia’s nickel ore reserves reach 3.74 billion wet metric tons (WMT), there is still a need to improve nickel quality.
“On the one hand, there has been a 202 percent increase in nickel prices in the past year due to the Russia-Ukraine conflict. But we have to watch out for the lack of domestic supply for high-quality nickel,” said Bhima.
Fourth, Indonesia is still in the process of reviewing the nickel DMO for the battery industry, which is being developed domestically. Thus, Bhima assesses that Indonesian nickel producers are not fully ready to start exporting nickel on a large scale.
It is known, Russia is getting a lot of economic sanctions from Europe and the US. One of the sanctions from the European Union was that seven Russian banks were expelled from the world’s largest payment system network, SWIFT.
The seven banks are VTB Bank, Otkritie Bank, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank, and Vnesheconombank (VEB).
Meanwhile, the US cut technology imports by more than half from Russia and banned 12 large Russian companies from taking on debt through western financial markets.