Indonesia Urges Australia to Embrace Collaboration on Nickel and EV Battery Production
Indonesia's Deputy Foreign Minister, Pahala Mansury, has emphasized that Indonesia's rapidly growing nickel industry should not be viewed as a competitor to Australia's nickel sector. Ahead of his visit to Sydney, Mansury is advocating for closer ties between the two nations, particularly in the critical minerals and electric vehicle (EV) battery production sectors.
Indonesia's nickel industry, largely funded by Chinese investments, has been criticized for flooding the global market, leading to the closure of several Australian nickel operations, including Wyloo Metals’ Kambalda mines and BHP’s Kwinana nickel refinery and Kalgoorlie smelter. However, Mansury urged Australia to see the potential for collaboration, suggesting that the two countries could work together to build a global EV battery hub that would diversify their markets beyond China.
Mansury stated that Indonesia is open to more Australian involvement in its domestic nickel and processing industry, which is crucial for EV battery production alongside other key minerals like lithium, manganese, and cobalt. He highlighted that Indonesian miners and processors are also looking to Australia as part of their diversification strategy. "The narrative needs to change," Mansury said, emphasizing that Indonesian nickel should not be seen as a threat to Australian nickel.
He pointed to the opportunities for collaboration, citing Australian company Nickel Industries' operations in Indonesia as an example of successful cooperation. With the global EV battery industry expected to need up to six times the current volume of critical materials by 2030, Mansury believes that both nations can benefit from working together.
Mansury also noted that Indonesia's transformation into a major player in the global nickel value chain has been driven by a government ban on raw nickel exports, aimed at fostering a domestic processing industry to support the country’s EV ambitions. While this policy has attracted significant Chinese investment and expanded Indonesia's nickel processing capacity, it has also led to global oversupply, depressed prices, and environmental concerns.
Australian nickel producers argue that they struggle to compete with Indonesia's lower labor costs and less stringent environmental and safety standards. They have called for the cost of producing nickel under higher environmental and workplace standards to be reflected in a "clean" nickel price. Earlier this year, the Australian government unsuccessfully lobbied the London Metal Exchange to distinguish between sustainable and unsustainable nickel, a move that was not well received in Jakarta.
Despite these tensions, Mansury emphasized that the potential for cooperation between Australia and Indonesia, particularly in critical minerals processing and EV battery production, far outweighs any competition concerns. He suggested that Australian miners could benefit from processing their minerals at lower costs in Indonesia, reinforcing the potential for mutual growth and development in this sector.
