Indonesian Nickel is offending Western Virtue-Signalling Consumers

Making batteries for electric vehicles requires environmental and geopolitical compromises, which seem to be ruffling the feathers of western green sensibilities. The Indonesian island of Sulawesi has become the centre for these compromises.

Nickel is very much at the centre of Indonesia’s efforts to modernise and become a green-energy powerhouse. In Sulawesi, one of the world’s largest reserves of the stuff can be found. A few years ago, in an attempt to capture more of the value of the supply chain, the government banned the export of ore in favour of local smelting and processing, thus making it essential to have in-country smelting capability. This has created some very uncomfortable trade-offs for the new-age battery business.

Environmental activists and virtue-signalling consumers are pressuring governments and consumers to convert to electric vehicles. The downside is the sheer scale of environmental damage wrought by nickel mines and the ore smelters, which burn vast amounts of low-grade and very-polluting Indonesian coal. For the West to clean up their act, a country in Asia needs to get dirtied up. This does not sit well with the environmentalist who should be having sleepless nights over the paradox. Some companies are trying to move to greater amounts of solar energy but for now, we will have to put up with the large smoke stacks belching out lung-clogging coal smoke.

These dark satanic mills……

Amongst the governments in the West—where it is acknowledged that they are significantly behind the Chinese in electric car manufacturing—there is a desire to rely far less on China for clean energy. To do this, Western governments may spend big, to the tune of a trillion dollars, to stop Chinese companies getting it all. But due to the early start of the Chinese companies, Western counterparts will have to be involved with and working with them to have any share of the pie. For instance, Ford Motor Company, in an attempt to vertically integrate the supply chain, has recently teamed up with PT Vale Indonesia to create a nickel processing plant but the other partner in the deal is Zheijing Huayou Cobalt, which is of course from China.

Others may shun the Indonesian nickel over green concerns, which will leave the field open for less concerned companies. Alongside the Chinese companies that have made Indonesia their home are a swarth of South Korean ones, and many of them are in business together.