A recent announcement by PT Trinitan Green Energy Metals (TGEM) indicated plans to build a 50ktpy class 1 nickel processing facility for the production of battery-grade nickel in an integrated “INGNITE” Eco-Industrial Park in the Sorong Special Economic Zone (SEZ), West Papua, Indonesia.

Indonesia is the world’s largest nickel producer and contains the world's largest nickel reserves. In 2014, Indonesia imposed an export ban on its nickel ores that has encouraged investment in nickel processing in the country. This formed part of the government's commodity-led development strategy, guided by the 2009 Mineral and Coal Mining law. Rather than simply exporting nickel ore, Indonesia has managed to attract investments in smelters and processing plants. At first, Indonesia focused on the supply chain of stainless steel through the construction of smelters producing class 2 nickel in the form of nickel pig iron (NPI). Before the first export ban in 2014, there were two nickel smelters in operation, 13 in 2020 and, according to the Ministry of Energy and Mineral Resources, the number should reach 30 by 2023. 

With EVs and lithium-ion batteries set to account for a growing and sizable chunk of nickel demand, Indonesian nickel resources are increasingly being targeted for the battery supply chain. By 2025, Indonesia aims to become a global player in EV batteries and a regional player in electric cars, supplying key products like nickel sulphate, battery precursors, and cathode materials. Investments into Indonesia are beginning to accelerate, with the first HPAL project having launched in 2021 and companies such as Tsingshan, Vale, CATL, and TGEM planning new projects in key SEZ regions. 

While stainless steel remains the main industry driver for nickel markets, growth in batteries will increase the competition for class 1 material. Tsingshan added a new level of risk to market investments in 2021 when the company redirected some of its NPI production to a conversion plant to produce a nickel matte that can feed the battery-grade supply chain. NPI has been a game changer in the stainless steel industry that has supported China’s cost position in the industry and the ability for stainless steel NPI suppliers to tap into volatile margins for battery-grade materials re-emphasises the growing competition from batteries for nickel resources.