Thursday, July 27, 2023

"The EU-Indonesia Fight Over Nickel and Who Gets to Own the Clean Energy Future"

From naked capitalism, July 26:

Indonesia boasts some of the world’s richest mineral deposits, but it has long focused on digging them up and shipping them to other countries for processing.

The government in Jakarta has been trying to change that, but is facing fierce resistance from the West. Raw nickel exports have been banned since December 2020 and Indonesia is instead trying to force foreign buyers to invest in smelters in Indonesia in order to access the country’s vast deposits. According to Asia Times, that plan has been working as “the mineral’s value-added increased from US$1.1 billion to $20.8 billion in 2021 alone.” The same restrictions were put in place on bauxite shipments on June 10. Tin and copper bans are scheduled to come next.

The EU and the US need the nickel to power their clean tech futures. The problem is they produce little of it themselves. More from the Peterson Institute for International Economics:

Nickel is one of the mineral lynchpins of the industrial sector because it is used in stainless steel, lithium-ion batteries to power EVs, and other renewable energy technologies. It is also a mineral produced in only small quantities in the US (0.5 percent of global production) and the EU—albeit thousands of miles from Europe in France’s New Caledonia territory in the South Pacific. Accordingly, the US and EU have designated nickel a critical mineral/raw material.

The EU and US are worried that if Indonesia develops manufacturing capability they won’t have control over clean tech. The EU is asking businesses to take countermeasures (what these are remain unclear) against Indonesia’s nickel ore export ban as a battle between Brussels and Jakarta plays out before the World Trade Organization. Jakarta has appealed a WTO ruling against its protective mineral policy and has maintained the export ban in the meantime. More from The Jakarta Post:

The Trade Ministry’s international trade negotiations director general, Djatmiko Bris Witjaksono, told The Jakarta Post on Thursday that the EU had placed “antidumping and antisubsidy” measures on Indonesian steel products.

Hikmahanto Juwana, an international law professor at the University of Indonesia, called the EU measures an “unfair contravention”, because the WTO’s ruling through the Dispute Settlement Body had yet to become legally binding, as Jakarta was appealing with the Appellate Body.He urged Jakarta to “fight back” by stopping all ongoing negotiations on international trade.

“The EU has brought the law of the jungle back into human society: The stronger one wins.”

The battle playing out between the EU and Indonesia is indicative of the larger struggle over who gets to own the clean energy future, and the critical minerals needed in everything from car batteries to windmills. From Down To Earth:

[Rob Davies, former minister of trade for South Africa] says for developing countries being able to use tools like localisation is critical. Minerals needed for green technologies, such as bauxite and copper ore used in wind turbines, or lithium and nickel ore used in electric vehicle battery, are concentrated in a few countries many of which are developing economies. Indonesia, for example, supplies 40 per cent of the world’s nickel ore, as per the International Energy Agency (iea). Since 2014, Indonesian has instituted a ban on the export of nickel ore and requires it to be processed domestically for export. As a result, its share of global refined nickel output rose from 1 per cent in 2013 to 30 per cent in 2021. The EU took the issue to wto claiming that the ban violated trade rules; wto agreed. Indonesian President Joko Widodo now plans to appeal the ruling. He may now ban export of bauxite in 2023 (it holds 3.75 per cent of the world’s reserves). Paul Butarbutar, co-founder of Indonesia Research Institute for Decarbonization, says: “When one company sets up a nickel smelter to process the nickel, it employs more than 12,000 people and local and central governments earn revenue. So, this protectionism helps our local eco- nomic development.”

WTO panelists suggested that Indonesia could only block exports in acute crises like mass starvation—and not in response to the needs of economic development, writes Todd N Tucker, director of industrial policy and trade at the Roosevelt Institute, US, in The Washington Post. This suggests wto would not leave much room for countries to manage economic transitions for the benefit of their own workers and producers, he adds.....


It's all about power and money.

It was always about power and money.