In Indonesia, state miners MIND ID (Mining Industry Indonesia) and Aneka Tambang (ANTAM); state utility Perusahan Listrik Negara (PLN); and state oil company Pertamina have agreed to form a new venture: Indonesia Battery Holding.

Indonesia Battery aims to be involved in the whole battery value chain, including producing battery minerals and chemicals, manufacturing their own cells, and battery recycling. The company would collaborate with Chinese and South Korean partners on projects valued at US$12 billion.

Indonesia is the world’s largest producer of nickel ore, a key ingredient in producing battery quality nickel sulphate used for manufacturing cathode precursors. Aware of the growing importance of nickel in EV battery development, Indonesia is building up an EV battery industry as part of their national strategy, aiming to make cells for EVs by 2023, notes Roskill.

Roskill believes the formation of this state-owned company will place Indonesia in a strong position to establish its presence in the market. In addition, the Indonesia Battery venture is targeting integration throughout the downstream battery supply chain.

However, advanced manufacturing technology, including the synthesis of high-quality battery materials (precursor, cathode, anode, electrolyte) and battery production, is not in place in Indonesia yet, which creates a critical challenge to the industry development.

Further, Roskill analysts Kevin Shang and Jack Anderson note, with two high-pressure acid leach (HPAL) projects in Indonesia having dropped plans to utilize deep-sea tailings placement (DSTP) as a method to dispose of tailings, a third HPAL project now faces rising pressure to follow suit.

With DSTP now seemingly removed as the main Environmental, Social and Governance (ESG) risk for Indonesian battery-grade nickel supply, attention will likely turn to deforestation and land clearance involved in nickel mining as well as the burning of fossil fuels to power these operations.

Despite the clear advantage offered by Indonesia’s abundant nickel laterite reserves, ideal for producing battery-grade products, the analysts said, the country must continue to address rising ESG concerns from stakeholders involved along the EV supply chain. This is especially pressing for EV automotive manufacturers whose inherently environmentally conscious customers are unforgiving of poor ESG practices.