PARIS, March 29, 2022 (EIRNS) –The Heritage Foundation, the U.S.-based “free markets” think tank, on its website on March 24, strongly complained about Indonesia’s repeated bans of nickel metal exports. Until recently, says the article, Russian nickel constituted about one-tenth of global supply. But Indonesia boasts the world’s largest nickel reserves, is already the largest producer, and now that Russian nickel faces sanctions, Indonesia should be exporting. What’s its problem—Indonesia could be in for a windfall as buyers compete for a scarce resource. “Unfortunately for Indonesians, their government has banned nickel exports.”
Nickel is a key input for stainless steel and for fossil energy alternatives like lithium-ion batteries. Even before the Ukraine conflict, demand for nickel had climbed sharply. According to Nornickel’s most recent annual report, global nickel consumption rose from just below 1.3 million metric tons in 2009 to more than 2.4 mmt in 2020.
The first worry for the West, is that Indonesia’s nickel production is in the hands of the Tsingshan Holding Group, “a firm at the heart of China’s Belt and Road overtures in the region.” Indonesia will get some benefits, but has become “geopolitically vulnerable. Dependence on exclusive Belt and Road links, rather than access to the panoply of buyers on an open global market, will weaken Indonesia’s hand as China threatens its territorial sovereignty at sea.”
Asia Times explains how Indonesia is “taking control of its mineral resources, incentivizing investment in processing facilities and shifting the international balance of economic power.”
In 2019, Djakarta announced that exports of nickel ore would be banned, starting January 1, 2020, to slow down the depletion of nickel ore reserves while promoting investment in processing facilities within the country.
In response, the EU requested the establishment of a panel at the World Trade Organization (WTO) to seek the elimination of unlawful export restrictions imposed by Indonesia on raw materials necessary for the production of stainless steel, notably nickel ore and iron ore. “These measures illegally restrict access for EU steel producers to raw materials needed for stainless steel production,” said the EU. The statement also said, “While the EU industry has reached its lowest level of stainless steel production in 10 years, Indonesia is set to become the second-largest producer in the world after China, fueled by unfair and illegal advantages like the ones challenged in this dispute.”
