Investment in Indonesia's largest nickel-based industrial park hits US$18bil

The latest addition to the Indonesia Morowali Industrial Park is a new plant owned by China's QMB New Energy Materials. - ST

MOROWALI, Central Sulawesi (The Straits Times/Asia News Network): Indonesia's largest nickel-based industrial park in Sulawesi's Morowali has seen investment more than quadruple to US$18 billion in the past four years, with analysts expecting South-East Asia's largest economy to rely on the green metal - used to power electric vehicles - to break out of the middle-income trap.

The latest addition to the Indonesia Morowali Industrial Park (IMIP) is a new plant owned by China's QMB New Energy Materials, which boasts an annual capacity to make 30,000 tons of ternary precursor, mainly used to help make electric-vehicle battery cells, solar panels, wind turbines.

In Monday's (Sept 26) inauguration attended by The Straits Times, QMB chief executive Xu Kaihua, said: "What we need to invest in is not just capital, but also technology and talent. We have invested US$998 million and down the road there will be an additional US$2 billion to expand capacity."

The capacity will gradually rise to 73,000 tons of ternary precursor by end-2023 before rising to 100,000. The company did not say when this would be reached.

QMB New Energy is a joint venture between Chinese electric vehicle battery firms Gem and CATL, and Tsingshan, the world's largest stainless-steel manufacturer.

The process towards completion and commercial operation went through three challenging years, including the Covid-19 pandemic, Xu said during the inauguration that also saw the official opening of a research centre for hydrometallurgy technology and renewable energy material to ensure smooth transfer of technology.

Next to the ternary precursor plant, Gem is also building a lithium battery recycling plant, that would be able to turn 99 per cent of every 40,000 tonnes of lithium battery every year into among others 5,000 tons of nickel and 2,000 tonnes cobalt.

Nickel boosts a battery's energy density, while cobalt ensures the battery do not easily overheat or catch fire.

IMIP is operated by a joint venture between Tsingshan and local partner Bintang Delapan.

Tenants at IMIP also have plants to process raw nickel into products such as stainless-steel slabs. The park has its own seaport and power plants. An airport mainly to cater the industrial park was completed in 2019.

Nickel is mostly used today as an alloy in stainless steel production, but the use of nickel to make batteries to power electric vehicles is growing fast.

About 70 per cent of nickel globally is used for stainless steel, nearly 15 per cent for batteries, and the rest is for others.

Indonesia has nearly a quarter of the world's nickel reserve, and the metal has become one of its major exports and is forecast to surpass coal and palm oil.

Indonesia's nickel-related exports surged to US$20.8 billion in 2021, from around US$2 billion in 2013. The first six months of 2022 recorded US$15.1 billion. Indonesia's total exports in 2021 were US$231.5 billion.

"Nickel would make Indonesia break out of middle-income trap and make the nation become an industrialised country," said a foreign mining analyst.

The middle-income trap refers to a situation where a middle-income country is failing to transition to a high-income economy due to rising costs and declining competitiveness.

Coordinating Minister of Maritime Affairs and Investment Luhut Pandjaitan said Indonesia is experiencing a demographic bonus that will peak in 2030, and will reap the most benefits while avoiding the middle-income trap.

A demographic bonus is where the number of productive age groups is greater than the number of non-productive age groups.

Indonesia boasts another nickel industrial park in Weda Bay on the island of Halmahera, while in North Kalimantan the country has started building an integrated ecosystem for industries that will support the global green economy development, whose size according to Luhut is five times that of Morowali park.

"We are talking about added value. Refining nickel creates huge added value. All forecasts on Indonesian economic growth that are out there have not reflected this huge potential added value," Luhut told ST on Monday.

"An Australian observer said Indonesia could become a mini superpower. He could be right."

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Indonesia , nickel , investment


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