The latest reports indicate that the United States is contemplating the idea of isolating Indonesian nickel due to the absence of a Free Trade Agreement (FTA) between the two countries. This development has sparked discussions and concerns about the potential impact it could have on Indonesia’s nickel industry. However, despite the uncertainty surrounding this matter, the Indonesian government remains optimistic, asserting that the United States would not dare to go ahead with such a move.
The proposed isolation of Indonesian nickel is primarily rooted in its exclusion from the green subsidy package outlined in the Inflation Reduction Act (IRA).
According to the plans, if electric vehicle batteries in the United States contain components sourced from Indonesian nickel, they would be ineligible for the green subsidy. This poses a significant challenge for Indonesia as it seeks to expand its presence in the global nickel market.
Despite these concerns, the Coordinating Ministry for Maritime Affairs and Investment (Kemenko Marves) in Indonesia believes that the United States still heavily relies on Indonesian nickel. Septian Hario Seto, the Deputy for Investment and Mining Coordination at Kemenko Marves, highlights the growing demand for nickel in the United States as it aims to achieve a substantial percentage of electric vehicle sales by 2032. This ambitious goal has prompted the need for a large quantity of batteries, with nickel being a crucial component.
Seto explains, “They say that by 2032, they want 67% of the cars sold in the United States to be electric vehicles. If, for example, they are currently selling 14 million cars per year, by 2032, let’s say it becomes 20 million, so at least 15 million cars will be electric vehicles. If all of them are EVs, we can calculate how many batteries they will need.”
Considering the scale of this demand, Indonesia, as the world’s largest nickel producer, holds a strategic advantage. Seto believes that the United States will inevitably require a significant supply of nickel, and Indonesia is well-positioned to fulfill this need.
“If they want the majority to come from Indonesia because Canada and Australia have not announced any significant capacity expansions yet, then everything will come from Indonesia,” Seto asserts.
In response to the potential isolation of Indonesian nickel by the United States, President Joko Widodo, commonly known as Jokowi, has weighed in on the matter. President Jokowi recognizes the situation and emphasizes the importance of Indonesia’s efforts to build a robust ecosystem, particularly in the electric vehicle sector, to position itself as a global player in the supply chain.
He underscores the need to overcome obstacles and asserts that Indonesia’s advantageous position can be leveraged against the backdrop of geopolitical considerations that may be occupying the United States.
As discussions unfold and stakeholders closely monitor the situation, President Jokowi expresses his hope that future leaders or Presidents will play a pivotal role in driving Indonesia’s transformation into a developed nation, with a particular focus on advancing the downstream nickel industry and its integration into the production of electric vehicle batteries.
As the dynamics surrounding the potential isolation of Indonesian nickel continue to evolve, it remains crucial for all stakeholders, including the Indonesian government and industry players, to closely follow developments, engage in constructive dialogue, and explore opportunities to ensure the sustained growth and competitiveness of Indonesia’s nickel sector in the global market.