Commodity Watch Indonesia: Focus on nickel, a precious metal with a bright future

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For Indonesia, which is a force in terms of commodity exports, cycles of high commodity prices are lucrative times as they generate plenty of foreign exchange earnings. We have mentioned several times before that the commodity boom of the 2000s was successful in accelerating Indonesia’s recovery from the Asian financial crisis of the late 1990s (which snowballed from financial crisis to an economic, social and political crisis for Indonesia).

Likewise, the ongoing commodity boom of the 2020s is now helping to accelerate Indonesia’s economic and social recovery from the COVID-19 crisis. Ideally, the revenue generated from these commodity booms is (partially) used to establish value-added industries, as Indonesia remains too dependent on barely processed commodities, such as coal and crude palm oil ( CPO). After all, these commodity price cycles come and go, while value-added goods have a much more stable value in international markets.

In this article, we are going to focus on nickel, a metal with exceptional physical and chemical properties that make it an essential material in (literally) hundreds of thousands of products.

Nickel is mainly sold in the form of refined metal or ferronickel. Most of it is used in alloying to produce stainless and heat resistant steels. Examples of nickel-containing products include batteries, coins, shielding, nails, pipes, cell phones, kitchen utensils, medical equipment, televisions, and electric stoves. In terms of sectors, it is in particular construction, automotive and consumer goods that use stainless steels.

Another large part of nickel production goes to superalloys or non-ferrous alloys, which are popular due to their resistance to corrosion (thus used in the aerospace industry for turbine blades, discs and other critical engine parts jet as well as land-based combustion turbines, such as in power plants).

Additionally, as the world increasingly supports climate neutrality, companies are reducing their operating emissions, while increasing investment in low-carbon metals like copper, cobalt, nickel and lithium. . This also includes growing investments in electric vehicles. And nickel is a key component of lithium-ion batteries used in electric vehicles.

Looking at global nickel production, Indonesia is the top contributor to global supply (2021 data) thanks to the expansion of the country’s domestic nickel industry and the growing number of high pressure acid leaching (HPAL) projects in the country (HPAL is a process used to extract nickel and cobalt from laterite/limonite deposits).

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