Tambang Bauksit Meliau
JAKARTA, Dec 26 (Jakarta Post/ANN): Indonesia’s ban on exporting bauxite from June 2023 brings it a step closer to its dream of developing an ecosystem for electric vehicles.
The bauxite ban, announced on Dec 21, comes nearly three years after the country banned the export of nickel ore.
Both these are must-haves in the production of electric vehicles – nickel is used for lithium car batteries, while bauxite produces aluminium to make lightweight, strong and corrosion-resistant electric vehicles.
President Joko Widodo said the move to ban bauxite was to add more value domestically including creating more jobs, increasing foreign exchange reserves and pushing for more equitable economic growth.
“The government will continue to consistently carry out domestic downstreaming so that added value is enjoyed domestically for the progress and welfare of the people,” he wrote on Facebook on Dec 21.
Indonesia is the world’s largest nickel producer and the sixth largest for bauxite. It also has large reserves of tin, copper and gold, as well as some rare earth metals.
The bauxite export ban will certainly not be the last as Indonesia develops its processing and refining of natural resources, said Indonesian Chamber of Commerce and Industry chairman Arsjad Rasjid.
“Basically at the end of the day, we don’t want to sell raw materials. We want to sell something semi-ready,” he told The Straits Times in a wide-ranging interview on Dec 21.
The export bans have benefited the country. Nickel export earnings reached US$20.9 billion (S$28.2 billion) in 2021, and is expected to exceed US$30 billion in 2022. In comparison, the value of nickel exports was only US$1.1 billion at the end of 2014. The eastern regions of Maluku and Sulawesi – where most of the nickel reserves are located – enjoyed significant economic growth, said Mr Arsjad.
“That’s the impact from just one commodity – just imagine if we can do more,” he added.
But Indonesia’s move was deemed protectionist, with the World Trade Organisation in November ruling in favour of the European Union, which maintained Indonesia’s nickel ban had violated international trade rules. Indonesia is appealing the decision.
These are some of the challenges faced by the country as it moves to electrify its transportation infrastructure, switch from coal to renewable energy and reach net-zero emissions by 2060, Mr Arsjad said.
He noted that advanced countries had benefited from the industrial revolution “powered by carbonisation”, yet they expect emerging nations like Indonesia “to power their growth with decarbonisation”. Assistance, from funding to technical know-how, must be given.
After all, borrowing costs in developing economies are much higher than in developed countries as financial institutions consider the former more risky. So, despite the strong appetite among investors to fund renewable energy projects, investment in green energy remains concentrated in developed economies, he said.
“The advanced countries (responsible) for the air today should help us with capital and technology. You can’t just tell us to stop, you must decarbonise. Hey, we are not selfish, we are breathing the same air as you,” he said.
Indonesia’s message was finally heard. After more than a year of negotiations with wealthy countries led by the United States and Japan, a US$20-billion package, known as the Just Energy Transition Partnership, was unveiled at the G-20 meeting in Bali in November.
Under the deal, Indonesia has pledged to cap power sector emissions at 290 megatonnes of carbon dioxide annually by 2030, and to generate about a third of its power from renewable sources by then.
Indonesia’s coal miners are committed to shift to renewable energy, although different companies “are at different stages of the journey”, said Mr Arsjad, who is also the president director of Indika Energy, one of the country’s largest coal producers.
Indika has been reducing its exposure to coal business, selling off all its stake in Petrosea, which provides contract mining services, in March 2022, and divesting 51 per cent in a shipping subsidiary specialising in shipping coal in October 2021.
The change, Mr Arsjad shared, was triggered by his daughter showing him an article some time ago naming him among the “100 killers of the world” for his senior role in the coal giant.
“That hit me. Then my daughter asked me: ‘Is that what you want?’ That’s when I went back to the board and said: ‘Hey guys, I think we need to change.’”
With electric vehicles being part of the country’s long-term roadmap to shift to cleaner energy, miners are also looking to diversify their businesses. Indika, for instance, announced in September a tie-up with electric vehicle component producer Foxteq Singapore to manufacture commercial electric vehicles and electric batteries.
But change takes time, Mr Arsjad noted.
“There’s no doubt that all of us in the world want to have clean air, and take care of the planet. But the roadmap will be different for every country,” he added.
“We are changing our strategy, but we can’t just close everything and close shop. There’s a transition process. But we all have the same goal.”
President Widodo has signed a directive ordering government officials to use electric vehicles for official purposes, and the government is currently finalising plans to subsidise sales of electric cars and motorcycles to make them more affordable.
He said: “With subsidies, there’s an incentive for (automakers) to produce more, and for people to buy electric vehicles.” - The Straits Times/ANN
