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Indonesia bets big on electric vehicles but has a long way to go

Indonesia wants to make an OPEC for this coveted metal​

Julia Horowitz
By Julia Horowitz, CNN Business
Updated 10:14 AM EST, Mon December 5, 2022


London
CNN Business —


Indonesia produces more nickel than any other country. As demand soars for batteries to power the energy transition, that presents a huge opportunity, and the archipelago nation of 276 million people intends to take advantage of it.

With the electric vehicle revolution driving up demand for key battery metals such as nickel, Indonesia has started lobbying for the creation of an OPEC-like group — but instead of governing the export of oil, it would unite top miners, allowing them to align their policies.
The bid looks like a long shot. Canada, another top producer, has said it would be “very unlikely” to participate. The nickel market is also structured very differently than the market for crude oil, with private firms rather than national companies running the show.

“I’m not convinced it’s going to be quite as amenable to a producer cartel,” said Richard Bronze, an analyst at Energy Aspects, a research firm.

But Indonesia’s campaign is an indication of how the clean energy transition could reshape geopolitics, as countries sitting on high-value reserves of nickel, cobalt and lithium look to leverage their access to in-demand commodities.

“This is a way they think they could be more relevant to the global energy market and geopolitics, and to be part of this emerging energy economy,” said Jane Nakano, a senior fellow focused on energy security and climate change at the Center for Strategic and International Studies.


A worker mans a furnace during the nickel smelting process at mining company PT Vale's plant in South Sulawesi, Indonesia.

A worker mans a furnace during the nickel smelting process at mining company PT Vale's plant in South Sulawesi, Indonesia.
Bannu Mazandra/AFP/Getty Images

The need for nickel​

In the 62 years since its founding, the Organization of the Petroleum Exporting Countries, better known as OPEC, has at times played a crucial role in shaping the global oil market, most notably when its Arab members banned exports to the United States and other countries over their support for Israel in 1973. It drew the ire of the White House in October for deciding to slash production, a policy that it reaffirmed at a closely-watched meeting on Sunday.
But with global demand for fossil fuels set to peak, its political standing is less certain — while nations with access to metals and minerals essential to the clean energy transition may increase their clout.

“The transition to clean energy means a shift from a fuel-intensive to a material-intensive system,” the International Energy Agency said in a report published in 2021, noting that a typical electric vehicle requires six times more minerals than a conventional car. It projects that EVs and battery storage systems will be the top end consumers of nickel by 2040, displacing the stainless steel industry.

Indonesia stands to benefit from this shift. After barring exports of nickel ore in 2020 — triggering a trade dispute with the European Union — it quickly developed its own downstream processing capacity with the help of foreign investors. The country now accounts for more than 38% of global refined nickel supply, according to data from market intelligence firm CRU Group. Its share continues to rise.

The country “is expected to be the biggest source of growth in the years ahead,” said Ewa Manthey, a commodities strategist at ING. “Production of nickel is surging to meet growing demand from the EV battery sector.”

Clouds of smoke escape from a nickel smelter furnace in an industrial area of Southeast Sulawesi, Indonesia.

Clouds of smoke escape from a nickel smelter furnace in an industrial area of Southeast Sulawesi, Indonesia.
Andry Denisah/SOPA Images/LightRocket/Getty Images


Indonesia quit OPEC in 2009 and again in 2016 due to disagreements about production cuts. But government leaders are now arguing that a similar cartel for nickel could be advantageous, boosting coordination with other top producers. Russia accounts for almost 20% of global supplies of the grade of nickel needed for batteries, according to Manthey. Canada and Australia are also big players. The latter competes with Indonesia for the world’s biggest nickel reserves.

By teaming up with other producers, Indonesia could, in theory, have more sway over prices. Despite the promising demand outlook, nickel prices on the London Metal Exchange can be very volatile. After spiking earlier this year following the invasion of Ukraine — at one point forcing the LME to halt trading — they came down sharply. There’s now surplus supply as the global economic outlook has dimmed, decreasing demand from makers of stainless steel.
“If they can control the supply a bit better, they could inflate the price of nickel a bit better,” said Alistair Ramsay, vice president of energy metals at Rystad Energy.

A new OPEC?​

People who track the nickel market are skeptical such an arrangement is workable. That’s in part because of how the industry is set up. While supply is concentrated among a few countries, individual firms are the ones in control of output. That’s different from oil production in countries like Saudi Arabia, Russia or the United Arab Emirates, for example, which is dominated by state-owned firms.

“We believe that Indonesia’s idea to create an OPEC-style group for battery metals such as nickel would be difficult to realize because, unlike OPEC nations, the mining operations of major nickel producers are controlled by various private companies,” said Jason Sappor, a senior metals and mining analyst at S&P Global Commodity Insights.

Indonesia also doesn’t have political buy-in at the moment. A government source told Reuters that Canada is “very unlikely” to join the effort.

Plus, Nakano of the Center for Strategic and International Studies isn’t convinced it would help Indonesia in the end, since it could spook the foreign investors the country is courting to develop its mining sector.

OPEC’s influence has waxed and waned over the years. The emergence of the United States as a major producer of shale in the past decade weakened its position. But the cartel has been back in the spotlight since the pandemic and Russia’s war in Ukraine roiled energy markets, amplifying the consequences of its supply decisions.

For countries sizing up the clean energy transition, it seems to present an alluring model. The Guardian newspaper has reported that Brazil, Indonesia and the Democratic Republic of the Congo are looking to create an “OPEC for rainforests” to govern conservation efforts. There’s also been talk that South American countries such as Argentina, Bolivia and Chile could create a lithium association.

Whether such efforts to organize will yield results remains to be seen. But the proposals underscore how the hunt for resources that will power the shift away from fossil fuels is likely to create new political alliances.

That’s especially true as competition for resources between the United States and China heats up. But other countries that have direct access to battery metals and other important minerals also want a say.

“The metals market and its importance to the energy transition is something we’re all waking up to and adapting to how it’s going to work in practice,” Bronze said.


 
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Indonesia to build $116.5m vehicle test site to capture ASEAN market


Norman Harsono
The Jakarta Post

Jakarta / Fri, December 11, 2020 / 04:17 pm
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The design of the Transportation Ministry's proving ground in Bekasi, West Java. (Courtesy of Transportation Ministry and PT PII/-)


The Transportation Ministry aims to finish building a Rp 1.64 trillion (US$116.5 million), international standard motor vehicle "proving ground" within the next four years to help Indonesian automakers capture the Southeast Asian market.

Transportation Minister Budi Karya Sumadi showed a project road map whereby the proving ground – a racetrack-like site to be built in Bekasi, West Java – was slated to begin development in 2022 and be finished by 2024.

The proving ground will test Indonesia-made motorcycles, three-wheelers, cars, buses and trucks in accordance with the international benchmark United Nations Regulation (UNR) on vehicles, to make them more compliant with other markets' standards, particularly the ASEAN market. “[Indonesia] produces a lot [of cars], we use a lot of cars but we don’t export as much,” said the minister during a Jakpost Spotlight webinar titled Improving vehicle safety in Indonesia through proving ground, held on Thursday.

Read also: Jokowi signs electric vehicle regulation

Indonesian automakers exported 180,903 completely built up (CBU) vehicles this year as of October, which represented a third of total vehicle production as of that month, according to Association of Indonesian Automotive Manufacturers (Gaikindo) data. However, Gaikindo aims to push exports up to 1 million units and domestic sales to 2 million units by 2025 against the backdrop of a cooling Indonesian auto market as big cities, including Jakarta, choke up with private vehicles.

For the government, raising vehicle exports is a means of strengthening Indonesia’s trade surplus, which hit $17.07 billion from January to October this year, according to Statistics Indonesia (BPS). The surplus supports the rupiah exchange rate and boosts the country’s economic recovery.

Indonesia's main competitor for the Southeast Asian auto market is Thailand, but Vietnam, the region’s rising economic star, recently signaled plans to go global after Vietnamese automaker VinFast acquired a proving ground in Australia, which Gaikindo expects will tighten regional competition going forward.

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The design of the Transportation Ministry's proving ground in Bekasi, West Java. (Courtesy of Transportation Ministry and PT PII/-)


The ministry’s land transportation director general, Budi Setiyadi, explained that the planned proving ground would add 19 new testing facilities to the ministry’s existing vehicle testing site (BPLJSKB) in Bekasi. The new facilities will test, among other aspects, vehicle emissions, noise levels, crash safety and mirror view in accordance with the UNR, a standard universally recognized by Southeast Asian countries through the ASEAN Mutual Recognition Arrangements (MRA).

“At the least there will be trust from other countries over products made in Indonesia,” said Budi. He added that “there are other [proving grounds] in ASEAN but ours will be the biggest” at 90 hectares. The second biggest in the region will be that in Thailand, according to ministry data.

Read also: Gaikindo expects car sales to remain low next year

He added that the proving ground would also feature facilities to test electric vehicles. The government issued last year a presidential regulation on developing a domestic EV industry. The proving ground is one of five multi-billion rupiah government-to-business cooperation (KPBU) projects forwarded by the Transportation Ministry in 2018.

The five serve as pilots in cutting state budget (APBN) spending on big transport infrastructure projects. The Finance Ministry, through state-owned lender PT Penjaminan Infrastruktur Indonesia (PT PII), is helping the Transportation Ministry secure funding for the test site.

PT PII president director Muhammad Wahid Sutopo said during the discussion that his company was awaiting the ministries’ nod to finalize a "final business case" document that would be presented to interested investors. The project was valued at Rp 1.64 trillion when announced in 2018 but Wahid said the new capital expenditure was estimated at Rp 2.09 trillion and foreign investors’ ownership would be capped at 49 percent as per existing regulations.

The government, through an availability payment scheme, planned to pay for and take over the proving ground after a 15-year period from when operations begin. Transportation Minister Budi Karya Sumadi speaks as a keynote speaker in a Jakpost Spotlight webinar held on Dec, 10.

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Other speakers and panelists in the webinar included Transportation Ministry land transportation director general Budi Setiyadi, Industry Ministry metal, machinery, transportation, equipment and electronics (ILMATE) director general Taufiek Bawazier, PT Penjaminan Infrastruktur Indonesia (PT PII) president director Muhammad Wahid Sutopo, Association of Indonesian Automotive Manufacturers (Gaikindo) chairman Yohannes Nangoi, Organization of Land Transportation Owners (Organda) secretary-general Ateng Aryono, Association of Indonesian Carrosserie Companies (Askarindo) chairman Sommy Lumadjeng, Gadjah Mada University (UGM) academic Muh Arif Wibisono and Indonesian Transportation Society (MTI) chairman Agus Taufik Mulyono. (JP/Wienda Parwitasari)

He hinted that interested investors hailed from countries “that are the principle holders of auto producers in Indonesia.” According to Gaikindo data from October, the Indonesian market is over 80 percent dominated by Japanese brands.

Industry Ministry metals, machinery, transport equipment and electronics industry (ILMATE) director general Taufiek Bawazier emphasized the proving ground’s ability to test higher safety standards for Indonesian-made vehicles. “It’s like a miniature of the hurdles in the real world,” he said in the webinar.

“This is very important to test because our aim is improving safety.” For Indonesian automakers, the proving ground promises to save “billions of rupiah” from testing Indonesian-made vehicles or vehicle components, such as large truck engines, as far away as Germany, said Gaikindo chairman Yohannes Nangoi. “Every year, over 400 models need to be tested,” he said during the webinar, describing how automakers also often had to bring government officials with them, abroad, to witness such tests firsthand.

 

Key Green Transitions: David Malpass, John Kerry, Sri Mulyani Indrawati, and Shemara Wikramanayake​

 

SK On to build nickel production facility in Indonesia with EcoPro, China's GEM​

All News 10:47 November 25, 2022
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By Kim Seung-yeon

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SEOUL, Nov. 25 (Yonhap) -- South Korean battery maker SK On Co. said Friday it has signed an initial agreement with two battery component producers to build a facility in Indonesia to produce an intermediate nickel product for electric vehicle batteries to secure stable supply of the key material.

The memorandum of understanding (MOU) was signed Thursday with EcoPro Co., a South Korean cathode producer, and Green Eco-Manufacture (GEM), a Chinese battery component maker, to build a factory to produce mixed hydroxide precipitate (MHP) in the Morowali industrial complex in Central Sulawesi, SK On said in a release.

The MHP is an intermediate nickel product and feedstock for nickel sulfate used to make battery-grade precursor. A precursor refers to a specific chemical form containing nickel, cobalt, manganese and aluminum before turning into cathodes, one of the key materials in lithium-ion batteries.

The factory will aim to produce MHP containing 30,000 tons of high-purity nickel starting in the third quarter of 2024. That is enough to produce 43 gigawatt hours of EV batteries, which can power about 600,000 EVs.

The three companies will also work together to secure oxidized nickel ore, a key source for MHP, at the Hengjaya mine, located in the same Indonesian state. Miners can extract cobalt from the oxidized nickel ore as a byproduct.

With the MHP facility, the three are also considering producing nickel sulfate and precursors in South Korea, a move that will help SK On continue its operations in the United States following the enactment of a new U.S. law on EV tax credits.

The Inflation Reduction Act, signed into law in August, requires EV batteries over the years to be made with higher portions of minerals processed or mined in the U.S or elsewhere that have free trade pacts with the country. South Korea has an FTA with the U.S.

The IRA has prodded South Korean automakers and producers of EV batteries and battery components to quicken their steps for facility expansion in North America or bolstering partnerships with the U.S. and its partner countries, like Canada and Australia.

SK On has been bolstering efforts to secure the battery components supply amid the changing industry landscape. It signed earlier this month a five-year lithium supply deal with Chile's SQM for 57,000 tons of the critical battery material.

SK On has also made an equity investment in an Australian miner, Lake Resources, and clinched a 10-year supply deal for 230,000 tons of lithium.

 

Hyundai to Build EV Battery Pack Factory in Indonesia​

By Editorial Team 16/12/2022
Summary

Hyundai Motor Group established a subsidiary, Hyundai Energy Indonesia, producing battery packs to complete the electric vehicle battery production chain. Hyundai Motor targets the plant's construction to start in the first half of 2023, while mass production will run in the second half of 2024.

Hyundai Motor management said the plant would produce battery packs and systems optimized for battery electric vehicle (BEV) models. The battery cells will be produced locally and then supplied to BEV models produced in Indonesia.

"The presence of Hyundai Energy Indonesia further complements the Hyundai Motor Group's electrification ecosystem in Indonesia, including the Hyundai Motor Manufacturing Indonesia plant that already produces BEVs and the upcoming battery cell plant, a collaboration with LG Energy Solution Ltd," Hyundai management said in a written statement on Thursday.

 

Vale Starts World's Largest HPAL Smelter​

By Editorial Team 29/11/2022
Summary

PT Vale Indonesia Tbk (INCO) conducted the groundbreaking ceremony of the Pomalaa Block nickel mine and smelter in Kolaka, Southeast Sulawesi, on Sunday. The Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan said the project had to start immediately due to its important contribution to Indonesia's target of developing an electric vehicle (EV) battery ecosystem in Indonesia. "In Halmahera, there is a High-Pressure Acid Leach (HPAL) smelter with a capacity of 20,000 tons for exports. In Morowali, 30,000 tons; in Pomalaa, 120,000 tons, so this is the largest in the world," he said in a speech during the ceremony.

Luhut emphasized the government's plan to oversee the issuance of several unfinished permits for the project. "Permits problems, prolong Amdal issuances, we will finish them as soon as possible. So, we do not want to hear delayed projects caused by time-consuming procedures," he said. INCO's HPAL smelter construction is expected to complete in 2025.

 

Indonesia gears up to become electric vehicle powerhouse with more raw material export bans expected​

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Indonesian Chamber of Commerce and Industry chairman Arsjad Rasjid noted that change takes time. PHOTO: YUSUF YANUAR

Arlina Arshad
Indonesia Bureau Chief
UPDATED

3 HOURS AGO

JAKARTA – Indonesia’s ban on exporting bauxite from June 2023 brings it a step closer to its dream of developing an ecosystem for electric vehicles.

The bauxite ban, announced on Dec 21, comes nearly three years after the country banned the export of nickel ore.


 

Indonesia gears up to become electric vehicle powerhouse with more raw material export bans expected​

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Bauxite Mine in Meliau



JAKARTA, Dec 26 (Jakarta Post/ANN): Indonesia’s ban on exporting bauxite from June 2023 brings it a step closer to its dream of developing an ecosystem for electric vehicles.

The bauxite ban, announced on Dec 21, comes nearly three years after the country banned the export of nickel ore.

Both these are must-haves in the production of electric vehicles – nickel is used for lithium car batteries, while bauxite produces aluminum to make lightweight, strong and corrosion-resistant electric vehicles.

President Joko Widodo said the move to ban bauxite was to add more value domestically including creating more jobs, increasing foreign exchange reserves and pushing for more equitable economic growth.


“The government will continue to consistently carry out domestic downstreaming so that added value is enjoyed domestically for the progress and welfare of the people,” he wrote on Facebook on Dec 21.

Indonesia is the world’s largest nickel producer and the sixth largest for bauxite. It also has large reserves of tin, copper and gold, as well as some rare earth metals.

The bauxite export ban will certainly not be the last as Indonesia develops its processing and refining of natural resources, said Indonesian Chamber of Commerce and Industry chairman Arsjad Rasjid.

“Basically at the end of the day, we don’t want to sell raw materials. We want to sell something semi-ready,” he told The Straits Times in a wide-ranging interview on Dec 21.

The export bans have benefited the country. Nickel export earnings reached US$20.9 billion (S$28.2 billion) in 2021, and is expected to exceed US$30 billion in 2022. In comparison, the value of nickel exports was only US$1.1 billion at the end of 2014. The eastern regions of Maluku and Sulawesi – where most of the nickel reserves are located – enjoyed significant economic growth, said Mr Arsjad.

“That’s the impact from just one commodity – just imagine if we can do more,” he added.

But Indonesia’s move was deemed protectionist, with the World Trade Organisation in November ruling in favour of the European Union, which maintained Indonesia’s nickel ban had violated international trade rules. Indonesia is appealing the decision.

These are some of the challenges faced by the country as it moves to electrify its transportation infrastructure, switch from coal to renewable energy and reach net-zero emissions by 2060, Mr Arsjad said.

He noted that advanced countries had benefited from the industrial revolution “powered by carbonisation”, yet they expect emerging nations like Indonesia “to power their growth with decarbonisation”. Assistance, from funding to technical know-how, must be given.

After all, borrowing costs in developing economies are much higher than in developed countries as financial institutions consider the former more risky. So, despite the strong appetite among investors to fund renewable energy projects, investment in green energy remains concentrated in developed economies, he said.

“The advanced countries (responsible) for the air today should help us with capital and technology. You can’t just tell us to stop, you must decarbonise. Hey, we are not selfish, we are breathing the same air as you,” he said.

Indonesia’s message was finally heard. After more than a year of negotiations with wealthy countries led by the United States and Japan, a US$20-billion package, known as the Just Energy Transition Partnership, was unveiled at the G-20 meeting in Bali in November.

Under the deal, Indonesia has pledged to cap power sector emissions at 290 megatonnes of carbon dioxide annually by 2030, and to generate about a third of its power from renewable sources by then.

Indonesia’s coal miners are committed to shift to renewable energy, although different companies “are at different stages of the journey”, said Mr Arsjad, who is also the president director of Indika Energy, one of the country’s largest coal producers.

Indika has been reducing its exposure to coal business, selling off all its stake in Petrosea, which provides contract mining services, in March 2022, and divesting 51 per cent in a shipping subsidiary specialising in shipping coal in October 2021.

The change, Mr Arsjad shared, was triggered by his daughter showing him an article some time ago naming him among the “100 killers of the world” for his senior role in the coal giant.

“That hit me. Then my daughter asked me: ‘Is that what you want?’ That’s when I went back to the board and said: ‘Hey guys, I think we need to change.’”

With electric vehicles being part of the country’s long-term roadmap to shift to cleaner energy, miners are also looking to diversify their businesses. Indika, for instance, announced in September a tie-up with electric vehicle component producer Foxteq Singapore to manufacture commercial electric vehicles and electric batteries.

But change takes time, Mr Arsjad noted.

“There’s no doubt that all of us in the world want to have clean air, and take care of the planet. But the roadmap will be different for every country,” he added.

“We are changing our strategy, but we can’t just close everything and close shop. There’s a transition process. But we all have the same goal.”

President Widodo has signed a directive ordering government official to use electric vehicles for official purposes, and the government is currently finalising plans to subsidise sales of electric cars and motorcycles to make them more affordable.

He said: “With subsidies, there’s an incentive for (automakers) to produce more, and for people to buy electric vehicles.” - The Straits Times/ANN

 

Managing Director of BRI Finance Believes Electric Vehicle Loans Are Rising Rapidly​

Monday, January 2, 2023 | 10:15 PM
By : Prisma Ardianto / FER


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President Director of BRI Finance Azizatun Azhimah. (Photo: Doc. BRI Finance)

Jakarta, Beritasatu.com - BRI Multifinance Indonesia (BRI Finance) stated that it is ready to welcome electric vehicle financing to grow better in 2023. This is in line with the trend of increasing demand for electric cars.

President Director of BRI Finance Azizatun Azhimah said, in fact, the market interest in electric vehicles in 2022 is actually quite large. However, supply from manufacturers, prices that are still considered expensive, to inadequate infrastructure are obstacles in itself.

"The potential is great, but for 2022 customers are still asking a lot, because there may be a technological shift from fossil fuels to electric power. Hopefully with various government incentives in 2023 this will be better. Because if we see that there have been many requests," said Azizatun Azhimah or commonly called Azizah, Monday (2/1/2023).

READ ALSO
BRI Finance Targets 2023 Net Profit to Grow 80 Percent
Azizah revealed that the increasing demand for electric vehicles can also be seen in the upward trend in motor vehicle loans recorded by Bank Indonesia (BI).

Based on an analysis of the development of Bank Indonesia (BI) money supply, motor vehicle loans reached Rp 113.8 trillion in October 2022, increasing to Rp 116.2 trillion in November 2022.

This number grew by 16.2% and 16.4% respectively compared to the same period in 2021. Therefore, her party has prepared several strategic steps to welcome the upward trend of the market in recent years.

"We are working with various ATPM and dealers, issuing special programs for financing electric motor vehicles. Our agents give rewards, or incentives so that they become more enthusiastic," explained Azizah.

 

Vale Indonesia teams up with Chinese firms on $8.6 billion nickel projects​

 

Mining giant Vale Indonesia divestment pushed again to June​


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Nickel mining activities at a PT Vale Indonesia site in Sorowako. After being transported to trucks, nickel material in the form of land is placed in a temporary shelter, then put into a factory to be processed until it gets a matte nickel of 78 percent, and is exported to Japan. (JP/Ruslan Sangadji)

Norman Harsono (The Jakarta Post)
Jakarta ● Tue, June 2, 2020



Indonesia’s acquisition of the local arm of Brazil-based nickel mining giant PT Vale Indonesia has been pushed back for the second time this year due to pandemic-related complications.

Vale, the country’s top nickel miner by output, said on Friday it had signed a deal with share buyer PT Indonesia Asahan Aluminium (Inalum), an Indonesian state-owned mining holding firm, to delay the acquisition until the end of June.

Read also: Vale Indonesia's profit, nickel output drop in Q1 after export ban

The deal was also approved by Vale’s big shareholder, Japan-based Sumitomo Metal Mining Co., Ltd. The shareholders initially scheduled the acquisition for March but postponed it to May amid market uncertainty.

“All parties remain committed to signing the definitive agreements, however, the current pandemic has presented challenges resulting in the delay,” writes Vale chief financial officer Bernardus Irmanto in a statement.

“Except for the extended date of signing for the definitive agreements, the terms and conditions of the Head of Agreements remain in full force and effect,” he added.

Vale Indonesia is slated to divest 40 percent ownership to Indonesians as required by Government Regulation No. 77/2014 on coal and mineral mining operations. The miner has already divested 20 percent ownership to the public through the Indonesia Stock Exchange (IDX).

The divestment is part of the government’s campaign to tighten control over Indonesia’s mineral wealth. The government’s aim is to raise state revenue but such regulations have been criticized as deterring foreign investment.

Read also: MIND.ID unlikely to issue new bonds until Freeport pays dividends

Inalum, now rebranded as MIND.ID, raised US$1.5 billion in global bonds earlier this month to acquire the remaining 20 percent ownership of Vale Indonesia and to pay off subsidiaries’ debts.

“Hopefully, we can execute it as soon as possible because the funds are ready,” said MIND.ID president director Orias Petrus Moedak at an online press conference on May 15.

Before Vale, MIND.ID had acquired the local arm of US-based metal miner PT Freeport Indonesia (PTFI), which operates the world’s largest gold mine in Indonesia’s most impoverished province, Papua.

 
Another divestment

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State Owned Enterprises Will Play a Role in Vale Indonesia Divestment, Not Much Different from Freeport​


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TUESDAY , 03 JAN 2023 | 10:10 | RIZKA


Holiday Ayo - The Ministry of State-Owned Enterprises (BUMN) will play a role in the process of divestment of PT Vale Indonesia Tbk (INCO).

As cited from finance.detik.com, SOE Minister Erick Thohir said this was the case with PT Freeport Indonesia (PTFI). According to him, this matter had been discussed at a limited meeting chaired by President Joko Widodo (Jokowi).

"So there is a limited meeting with the President chaired directly, there is the Minister of Energy and Mineral Resources, I have the Coordinating Minister for Investment, there is the Minister of Finance, there is the Coordinating Minister for Economics, there is the Minister of Investment that the Vale divestment, BUMN will play a role like before Freeport," he said, Monday (2/1).

Vale itself is required to divest 51% of its shares as a condition for extending its contract in Indonesia, from a Contract of Work (KK) to a Special Mining Business Permit (IUPK). Vale has divested 20% of its shares to MIND ID Mining BUMN Holding. According to Erick, Vale is an important part because it is a nickel producer.

"Vale is an important part for us, because why, Indonesia is one of the countries that produces nickel," he said.

As cited from the Indonesian Stock Exchange (IDX), the shareholding portion of Vale Indonesia is 20% PT Indonesia Asahan Aluminum (Persero), 43.79% Vale Canada Limited, 15.03% Sumitomo Metal Mining Co Ltd, and 21.18% the public .

Meanwhile, Freeport's divestment so that the majority of its shares are controlled by Indonesia through Inalum (now the mining holding) has gone a long way. As summarized by detik.com, this was marked by President Jokowi's directive on January 10 2017 to increase state ownership in Freeport to 51% from 9.36%.

After that, the process to acquire Freeport shares was underway. On January 11, 2017, the government issued Government Regulation (PP) Number 1 of 2017, namely the fourth amendment to PP Number 23/2010 concerning the implementation of mineral and coal mining business activities which contains several important points.

First, changes to the terms of divestment of shares up to 51% in stages. Second, the obligation of KK holders to convert their permits into a special mining business license (IUPK) regime.

From January to August 2017, renegotiations were made with Freeport McMoRan (FCX), which owns 90.64%. The renegotiation includes four things, namely a 51% divestment, continuation of PTFI's operations until 2041 through the change of KK to IUPK, long-term investment guarantees related to taxation, PNBP, and regulatory guarantees, and finally the construction of a smelter that can operate January 12, 2022.

 

Britishvolt and Bakrie Group Battery Factory Permits Enter Final Stage​

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Anindya Bakrie, Bakrie Group President Director, and Britishvolt CEO signing MOU

Dionisio Damara - Bisnis.com January 11, 2023 | 2:55 p.m.

Bisnis.com, JAKARTA – Minister of Investment/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia said that the investment licensing process for the construction of the Britishvolt electric vehicle battery factory and the Bakrie Group has entered the final stage.

British Volt is a manufacturing startup and developer of low-carbon electric vehicle battery technology. By cooperating with Bakrie Group's subsidiary, PT VKTR Teknologi Mobilitas, Britishvolt's investment value is projected to reach US$ 2 billion by 2027.

"Regarding Britishvolt, it is true that investment from the UK will also go into the EV [electric vehicle] battery ecosystem and it has come in. Now the permit has been finalized, the location is also Insyaallah is almost clear," he said on Wednesday (11/1/2023).

Bahlil said that not only the UK, the investment commitment of electric vehicle battery factories in Indonesia is also inhabited by LG Energy Solution from South Korea and Contemporary Amperex Technology or CATL from China.

In addition, he continued, there are also BASF and Volkswagen from Germany, then there is the name Foxconn which comes from Taiwan. Bahlil said all the names have committed to investing in the country.

Based on Bisnis news in early December 2022, President Joko Widodo stated that Indonesia has great potential related to the manufacture of electric vehicle batteries.

According to the President, Indonesia is recorded to have 60 percent of the raw materials for electric battery production, except lithium. With all his potential, Jokowi believes this is an attraction for investors to build an electric vehicle factory in Indonesia.

"Anyone who wants to build an electric car electric motorcycle electric vehicle, will come here because it is more efficient that all the goods are there, the copper has bauxite, the chassis for the airframe car is all here," said Jokowi at the 2022 Chamber of Commerce and Industry in early December 2022.

 
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Britishvolt teams up with Indonesia’s Bakrie family in nickel venture​

UK battery start-up building gigafactory in Northumberland moves to secure supply of key metal

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An artist’s impression of the Britishvolt gigafactory being built in Northumberland

Neil Hume, Natural Resources Editor

MARCH 29 2022


Britishvolt, the UK battery start-up, is joining forces with a wealthy Indonesian family as it looks to secure supplies of nickel for its giant gigafactory in Northumberland.

Under the agreement, Britishvolt will initially work with the industrial conglomerate controlled by Bakries to develop a plant capable of producing a nickel compound that can be used by battery manufacturers.

Once the nickel sulphate facility has been established the two parties will look at the potential to develop a 15GW gigafactory in Indonesia.

“The deal gives us security of nickel from the largest source in the world,” said Timon Orlob, Britishvolt’s chief operating officer.

Nickel is a key component in the more powerful batteries used by electric vehicle makers and the war in Ukraine has raised fresh concerns about security of supply.

Russia is the biggest producer of battery-grade nickel, responsible for about 15 per cent of global supply.

Fears that supplies could be disrupted by western sanctions contributed to an extraordinary spike in nickel prices to more than $100,000 a tonne that forced a week-long suspension of trading on the London Metal Exchange.

Battery manufacturers are now trying to secure supplies of nickel from other parts of the world. Northvolt, the European battery start-up backed by Volkswagen, said last week it would buy low-carbon nickel for its batteries from Canadian mines owned by Vale.

Tesla boss Elon Musk has also expressed concerns about future nickel supply, promising huge contracts over a long period of time for companies that can mine the metal in a sustainable and environmentally sensitive way.

The International Energy Agency reckons demand for nickel will need to grow 19-fold by 2040 if the world wants to hit the targets of the Paris agreement on climate change.

Indonesia’s president Joko Widodo is keen to capitalise on these trends and hopes to make the country the world’s centre for nickel processing and battery production.

However, most of the projects being developed in the country use coal-fired electricity. Britishvolt said it would bring its strict environmental, social and governance standards to the partnership with Bakries & Brothers. It says the proposed nickel sulphate plant will eventually be powered by renewable energy.

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The billionaire Bakrie family are best known in the UK for their controversial plan in 2010 to set up a world class mining group in partnership with British financier Nathaniel Rothschild. However, the deal quickly turned sour during a downturn in commodity markets and Rothschild eventually sold out in 2015.

Britishvolt has raised about £1.7bn in funding from warehouse provider Tritax and investment group Abrdn to construct its factory in Blyth. That investment was backed by £100mn from the UK government’s Automotive Transformation Fund.

“This collaboration, which follows the Indonesian Investment Minister’s visit to the UK recently, marks the start of a sustainable supply chain of critical minerals to Britishvolt’s planned gigaplant in Northumberland,” said Lord Gerry Grimstone, the UK’s investment minister, in a statement.

The company’s shareholders include Swiss miner and commodity trader Glencore, which has an agreement to supply Britishvolt with cobalt, another key battery metal. Britishvolt hopes to open its factory in 2023, although it has yet to show publicly its own in-house battery developments.

Speaking at the FT Commodities Summit in Lausanne last week, Orral Nadjari, founder and chief executive of Britishvolt, said he would look at all options to secure battery raw materials, including investment in junior miners.
“The smaller companies are the ones sat with assets,” he said.

 
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