Whatever the short-term movements in metals prices (there have been signs of weakness, reflecting recession concerns), there are indications here and there of future squeezes to come.
Indonesia may impose a tax on nickel exports this year, President Joko Widodo said, as the biggest producer of the electric-vehicle battery metal looks to refine more at home.
Jokowi, as the president is known, confirmed that Southeast Asia’s largest economy was considering introducing a levy in an interview with Bloomberg News Editor-in-Chief John Micklethwait in Jakarta on Thursday. That came after an Indonesian government official said early in 2022 that the country was studying a progressive tax on nickel pig iron and ferronickel.
The world’s epic shift into EVs has spurred a surge in demand for battery metals including nickel, lithium and cobalt. While Indonesia has benefited from rising prices of nickel, also used to produce stainless steel, Jokowi wants the nation to move up the EV supply chain. Ultimately, he wants to stop all exports of raw materials.
“Epic change”: That’s one way of putting it.
What’s unsurprising is that Indonesia wants to capture more of the value associated with the manufacture of electric vehicles. That’ll be value (and jobs) retained and, indeed, created in Indonesia rather, say, than in the U.S., raising yet again questions about how much of a net jobs creator EVs (over here) will turn out to be.
And, in a related story (also via Bloomberg):
Indonesia wants Tesla Inc. to make electric cars there, not just batteries, and is willing to take the time needed to convince Elon Musk to see the country as more than just a rich repository of resources.
“What we want is the electric car, not the battery. For Tesla, we want them to build electric cars in Indonesia,” President Joko Widodo said in an interview with Bloomberg News’ Editor-in-Chief John Micklethwait on Thursday. “We want a huge ecosystem of electric cars.”
Jokowi, as the president is known, said that he had similar expectations from Ford Motor Co., Hyundai Motor Co., Toyota Motor Corp and Suzuki Motor Corp., signaling his intent to seek investment and ensure Indonesia was not relegated to being just a raw material supplier or component maker in the global electric-vehicle supply chain.
For a list of countries with substantial nickel reserves, go here. The U.S. comes in at No. 7 (far below No. 6, Canada) and is included, I suspect, largely as a courtesy, so that American readers can see where the U.S. stands.
Meanwhile, over in Europe (via the Financial Times):
A second smelter in Europe has been forced to halt production in as many days because of soaring energy bills, underlining the deepening fallout of the gas crisis for the region’s industry.
The Slovalco aluminium smelter in Slovakia, majority owned by Norsk Hydro, will close primary production by the end of September and affect 300 full-time jobs. The shutdown follows a similar decision a day earlier to cease output at a zinc smelter in the Netherlands.
Smelting ore to produce metal is one of the industrial processes most reliant on energy, the cost of which has rocketed.
A wave of production curtailments and more recent closures in Europe highlight the pressure that heavy industry faces from gas prices that have soared to all-time highs and have hit 13 times their average of the previous decade after Russia throttled supplies to the continent.
One way or another, the gap left by Russian natural gas will, in time, be filled, and the extreme energy price pressures that Europe is now seeing should ease. But with smelting viewed, in the West anyway, as a CO2 villain, its problems are not going away, which won’t be good news for anyone who, directly or indirectly, relies on this process. And anyone in this case is just about everyone.
Greenflation is going to be with us for a long time.