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December 21, 2022



Certainly, electric vehicles are pollution free. However, getting to that point is a well-concealed and looming environmental disaster. The Nikkei Asia Review recently published an article entitled Dirty Metals for Indonesian Nickel to EV Battery Industry. Indonesia is “ground zero” for nickel production which is essential in the fabrication of batteries for electric vehicles. It produces 38% of the exponentially increasing world refined nickel production to meet battery demand. Taking a page from OPEC and its control of oil production, Indonesia is now evaluating an approach to create a similar cartel for nickel. Clear skies in the western world come at a steep environmental price for Indonesia. The most insidious fossil fuel, coal, sprays a massive amount of coal dust and caustic smoke into the atmosphere in the processing of the nickel ore.

The World Bank leader board of Asian economies is shown below which places Vietnam in the top growth position going forward into 2023 at 6.7% as compared to that of China at 4.5%.  In fact, the recent Covid-19 lockdowns in China may prove that the World Bank estimate for China is overstated.

The largely Chinese investment in Indonesian nickel refining facilities to support a vast number of battery-related projects has amounted to some $29 billion.  Indonesia has the world’s largest reserves of nickel representing a quarter of the world’s proven reserves. From being a mere supplier of raw materials a few years ago, Southeast Asia’s largest economy has its sights set on becoming a manufacturer of batteries and eventually electric vehicles. The outlook for nickel demand is expected to treble as EVs and energy storage is a key element of sustainable energy development targets.

Given the fundamentals of the growing economy in Vietnam, it should come as no surprise that there has been a major shift in direction toward more sophisticated products. Moreover, the level of investor confidence in Vietnam has fueled that program. On the other hand, recent Covid-19 “lock-down” riots in the Foxconn Apple iPhone plant in China, shown here, do not present a reliable investment climate there. Foxconn is offering departure bonuses to the rioting employees to encourage them to leave. First you lock them in the facility and then you offer bonuses for them to leave.

Western companies seem to be reluctant to invest in the manufacturing of nickel batteries due to Indonesia’s weak environmental laws. On the other hand, the Chinese are quite happy to fill that void and import the nickel from Indonesia to make batteries for clean energy cars at home. Therefore, western companies leave the dirty hands of nickel laundering to the “ever ready” Chinese.  The net effect on the environment is the same though it is certainly better marketing not to be identified with the polluter. Therefore, the bottom line from an environmental standpoint is to resolve the energy pollution of nickel refining with something other than coal which is clearly cancer to the environment and those who live around the emissions.

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