Indonesia's Nickel Rush

○ Chinese companies are pumping billions into two islands that hold giant ore deposits

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About 3,000 miles south of Beijing, Chinese mining companies have set up operations in the heart of the world’s largest known nickel reserves. On the Indonesian islands of Sulawesi and Halmahera, they’ve built refineries, smelters, a new metallurgy school—even a nickel museum.

Together, they’ve plowed $3.2 billion into the remote islands this year alone, bringing the total to $14.2 billion in investment over the past 10 years— enough to secure their nickel supply into the next decade. The metal is primarily used in the production of stainless steel, but it’s also a critical component in electric vehicles. It makes up 90% of the cathode, the most expensive part of a high-performance battery, and there’s concern that demand will outstrip supply in the not-so-distant future.

That’s an issue for EV makers all over the world— Tesla Chief Executive Officer Elon Musk famously begged miners to “mine more nickel” on a 2020 earnings call—and particularly for China, home to the world’s largest market for plug-in vehicles. Chinese companies have been assiduous in locking in supplies of various battery components and, as a result, will dominate the supply chain for at least five years, according to BloombergNEF, a unit of Bloomberg. To break its reliance on China for nickel and other critical minerals, the US would need to invest almost $90 billion by 2030.