Indonesia's Nickel Paradox: Between Vast Potential and Limited Downstreaming

JAKARTA, KOMPAS.com - A senior researcher from the Centre for Sustainable Transportation Systems at the Institut Teknologi Bandung (ITB), Agus Purwadi, has spotlighted the suboptimal utilisation of Indonesia’s nickel reserves to drive the electric vehicle battery industry. Although Indonesia is one of the world’s largest nickel suppliers, projected to meet up to 70 per cent of global nickel demand, it is assessed as still grappling with downstream activities that offer relatively limited added value. He thus views this situation as a paradox in the development of the national industry. Currently, most nickel processed products domestically are in the form of semi-finished materials. These products are then shipped abroad for further processing into batteries, particularly by countries with more advanced manufacturing technology. This condition leaves Indonesia’s position in the global electric vehicle supply chain still weak. Nevertheless, the development of the battery cell industry is considered key to increasing added value as well as national competitiveness. In the global supply chain, China still dominates as the importer of nickel ore raw materials from Indonesia. Therefore, accelerating the construction of a battery cell ecosystem is an important step so that Indonesia does not merely serve as a raw material supplier. The government has previously promoted major investments in the nickel processing sector as an effort to strengthen Indonesia’s position in the global electric vehicle industry supply chain.