Fortune Minerals : Cobalt News

The Business Times - December 16, 2022

On the Indonesian islands of Sulawesi and Halmahera, Chinese companies have built refineries, smelters, a new metallurgy school-even a ...

ABOUT 3,000 miles south of Beijing, Chinese mining companies have set up operations in the heart of the world's largest known nickel reserves. On the Indonesian islands of Sulawesi and Halmahera, they've built refineries, smelters, a new metallurgy school-even a nickel museum…Together, they've plowed US$3.2 billion into the remote islands this year alone, bringing the total to US$14.2 billion in investment over the past 10 years-enough to secure their nickel supply into the next decade. The metal is primarily used in the production of stainless steel, but it's also a critical component in electric vehicles (EV). It makes up 90 per cent of the cathode, the most expensive part of a high-performance battery, and there's concern that demand will outstrip supply in the not-so-distant future…Chinese companies have been assiduous in locking in supplies of various battery components and, as a result, will dominate the supply chain for at least five years, according to BloombergNEF, a unit of Bloomberg. To break its reliance on China for nickel and other critical minerals, the US would need to invest almost US$90 billion by 2030…China has less than 5 per cent of the world's known reserves of nickel. So as it's done with cobalt in Congo and lithium in South and Central America, it looked overseas, to a country eager for foreign capital and technical know-how. "China's been ready and willing to invest in places where the US, European, even the Canadian, Australian companies haven't gone," says Michelle Foss, a fellow at Rice University's Baker Institute Center for Energy Studies who's researched China's growing hold over nickel…Indonesia has become an enthusiastic partner. President Joko Widodo is determined to wean his country off exports of raw commodities by forcing producers to do processing and manufacturing onshore…Jokowi's administration cast a wide net, but so far only the Chinese have been willing to sink large sums into production facilities. Australia, Canada, South Korea and the US combined have invested just US$1.5 billion in Sulawesi and Halmahera over the past decade…Part of the hesitancy may be because most of the nickel mined in Indonesia is a low-grade type used for stainless steel. Lithium-ion battery makers need Class 1 nickel, more than 99.8 per cent pure. Until now, producers have been able to get it from richer nickel sulfide deposits, primarily in Australia and Canada, but as EV production ramps up, the race is on to develop new supplies…To do that, Chinese companies are deploying a technology called high-pressure acid leaching (HPAL). It's difficult, expensive and bad for the environment. But their bet is that nickel prices will stay high and the ores cheap, making HPAL commercially viable despite its steep cost…Elsewhere, Chinese companies have encountered more resistance. Australia, Canada and the US are stepping up scrutiny of foreign investment in critical materials tied to electric cars and clean energy. The Philippines-also home to large nickel ore reserves-has been chilly to China following its alleged incursions in the South China Sea…Ultimately, China offers Indonesia more than a hand up the nickel value chain. It's sharing a playbook, one Jokowi seems happy to follow: Open your arms to foreign investors, under the condition that they share intellectual property and put money into training and development. That strategy was critical to China's own development in the late 1990s and early 2000s.