Tesla’s Growing Demand For Nickel Casts A Spotlight On Indonesia
The growth of the global electric vehicle industry presents opportunities and challenges for Indonesia.
Tesla has revolutionised the ways in which we view and use electric vehicles. As we drive towards increasing sustainability in our transport industry a balance must be found between the environmental impacts of transport and the sustainability of mineral mining operations. As legislation is being formed there are now opportunities to address the challenges in this new industry.
It is evident that Indonesia will play a pivotal role in this process due to its extensive mineral deposits and sustainability in mining operations will require cooperation from both industry and regulators. A balance is achievable but will only be realised through the strict monitoring of mining operations.
During the decade between 2008 and 2018 Tesla’s revenue increased from 15 million a year to 21,461 million a year. This startling growth reflects Tesla’s design but also an increasing demand for high-quality electric vehicles in the market. During 2019 Telsa delivered 367,200 vehicles to customers and is setting the standard for electric vehicles. Most major automotive manufacturers now in the process of transitioning into the electric vehicle market. Technological development has been at the heart of this incredible success and has focused on innovative battery technologies.
Electric vehicles embody a leap forward in power innovation. It is within the batteries that drive electric vehicles that materials science has delivered the required energy density. Energy density is key to improving the range and size of electric vehicles. Tesla currently relies on cobalt in their batteries but Elon Musk’s recent announcement that they would offer a “giant contract” to nickel miners indicates their intent to move from cobalt to nickel.
Although there are nickel deposits in countries such as Canada and Australia, Indonesia has some of the largest concentrations of the mineral. Tesla realised that the production of environmentally friendly cars should be based upon sustainably sourced resources. To monitor their suppliers Tesla uses third-party companies to conduct unscheduled checks. These checks are to ensure that environmental standards are being met and there is no use of child labour.
Indonesia aims to capitalise upon their nickel resources to develop its downstream industries. It has identified that the international market for electric vehicles will continue to grow and opportunities exist for Indonesia to develop a thriving electric vehicle industry. This will serve both Indonesia’s large internal market and the global export market. To encourage this growth Indonesia recently implemented a ban on nickel ore exports. Although the business logic of the ban seemed strong the controversial legislation has adversely impacted the economy during the COVID19 lockdown. Indonesia aims is to build downstream facilities such as smelters which will form the basis of burgeoning battery and electric vehicle industries.
Nickel is the second most expensive component in the production of electric vehicle batteries after cobalt. Nickel is necessary to building battery cells that have high energy densities. Without nickel, the goal of developing larger electric vehicle classes with sufficient range for industrial applications may be unachievable. As the industry becomes increasingly globalised the demand for Indonesian nickel will only increase. With the science available to us today it is possible to make informed decisions on how nickel resources will be mined to benefit both the economy and limit the impact on Indonesia’s environment.
Both cobalt and nickel have issues associated with their mining. It is the environmental impact of nickel extraction which is important to minimise. Indonesia has a unique diversity of flora and fauna that needs to be protected. Not only does this biodiversity hold biochemical secrets that could benefit medicine it also plays a vital role in the wider regional ecology.
Indonesia is an archipelago of tropical islands and nickel was first prospected on the island of Sulawesi in 1901. As Indonesia legislates the industry there are opportunities to implement environmental safety standards which can protect Indonesia’s coral reefs and tropical forests. It seems inevitable that Tesla will engage with Indonesia’s nickel miners and its avowed aim to minimise the impact of mining provides an opportunity to implement standards that could set the bar for mining in Indonesia.
It is profit which drives industry but that goal must be tempered with respect for our environment. In an enlightened age, it is only fitting that vehicles which reduce emissions are manufactured in a sustainable manner. Otherwise, as the activist Pius Ginting says “the net result is we have clear air in our cities, but then we destroy a rich biodiversity area.”
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