September 19, 2023
JAKARTA – Indonesia may see its nickel reserves depleted in less than two decades as a result of high annual production amid increased demand from smelting facilities, a senior minister has warned.
Energy and Mineral Resources Minister Arifin Tasrif has forecast that at current nickel ore consumption, the world’s largest nickel producer has around 15 years until its deposits run out.
The minister told reporters on Friday he did not rule out the possibility there could be a longer reserve life if the country “was not wasteful in the use of nickel.”
To further extend the reserves, the ministry will continue to attract more investment for exploration projects and develop recycling facilities for electric vehicle (EV) batteries, he said.
Nickel has become one of Indonesia’s top selling points to attract EV investment from leading producers such as Tesla and BYD. The country is setting itself up as one of the world’s EV hubs, banking on its huge nickel reserves, which are deemed essential to produce EV batteries.
Indonesia has a total of 22.3 billion tonnes of nickel ore reserves, consisting of proven reserves and estimated reserves of 5.3 billion and 17 billion tonnes, respectively, according to Arifin, referring to the weight of the ore.
However, experts say the exact nickel content in ore is projected to be far smaller than the figure used by the government.
“Nickel ore does not only contain nickel. A tonne of nickel ore may contain only 1.5 to 3 percent of nickel metal,” Ahmad Zuhdi Dwi Kusuma, an analyst at state-owned Bank Mandiri told The Jakarta Post on Monday.
Indonesia has a total of 21 million tonnes of nickel reserves, according to the United States Geological Survey (USGS). “This is based on the amount of nickel metal contained in the ore,” Zuhdi said.
USGS data also shows nickel miners in Indonesia produced 1.6 million tonnes of nickel last year, an increase of over 50 percent compared with the previous year.
Putu Rusta Adijaya, a researcher at The Indonesian Institute (TII), said the forecast was a much-needed alarm call that Indonesia should start extracting its natural resources more carefully.
“There needs to be a measurable study of how many smelters actually need to be built. If [Indonesia] overbuilds [nickel-processing facilities], [it will cause] a decline in nickel reserves due to over-mining [and an increase in] environmental risks,” he said in a statement issued on Monday.
Southeast Asia’s largest economy saw an increase in new nickel-processing facilities after it banned the export of unprocessed nickel ore in 2020.
As of June this year, Indonesia had 34 nickel-processing smelters, twice the number of 17 in 2020, according to Energy and Mineral Resources Ministry and Industry Ministry data.
From the current figure, however, only four of them deploy high-pressure acid leaching (HPAL) technology to produce the hydrometallurgical nickel called mixed hydroxide precipitate (MHP) that is needed to make EV batteries, the Industry Ministry says.
The companies include PT Huayue Nickel Cobalt, PT QMB New Energy Material and PT Halmahera Persada Lygend.
The majority of the nickel smelters in Indonesia still use the pyrometallurgy method to produce nickel pig iron and ferronickel as raw materials for stainless steel and steel alloys.