As Indonesia’s nickel market continues to flourish, industry experts are predicting the base metal could steal palm oil’s export status.
As the electric vehicle (EV) market continues to evolve, the global exports that contribute to it are reshaping simultaneously. EV demand has had a strong impact on Indonesia, whose blossoming nickel industry may soon overshadow palm oil, the country’s second-largest export.
While stainless steel production still accounts for about 70 percent of the nickel market, the base metal is also a key component in most lithium-ion batteries alongside battery metal companion cobalt.
With China currently dominating the EV market, nearby neighbors have been eager to jump on the bandwagon and help supply the Asian nation with necessary materials.
As one might expect, Indonesia is no exception. In a recent interview with Reuters, Chief of Indonesia’s Investment Coordinating Board Thomas Lembong said he believes the nickel industry could take the spotlight away from major export palm oil.
“Our palm oil industry is worth about US$18 to US$20 billion in exports. I could see nickel and its derivatives, stainless steel, carbon steel, lithium-ion battery cells, surpassing that in the next 10 to 15 years,” Lembong told Reuters.
According to a statement from Indonesia’s Ministry of Industry, the country is currently on track to become the world’s second-largest stainless steel producer as its main production site at Morowali reaches a targeted 4 million tonnes per year.
Last year, Indonesia led the pack in terms of nickel production, a report from the US Geological Survey states. The country saw mine production of 560,000 metric tons in 2018, with reserves being listed at 21 million metric tons.
According to the Observatory of Economic Complexity, Indonesia is the world’s 25th-largest export economy, sending out US$188 billion worth of goods in 2017. Those exports were led by coal briquettes, making up 10 percent at US$18.9 billion, and palm oil, which made up 9.6 percent at US$18.2 billion.
As of Tuesday (March 26), nickel was trading at US$12,845 per tonne on the London Metal Exchange.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.