Indonesia Will Hurt China The Most By Keeping Nickel At Home

Indonesia said on Wednesday it is studying a progressive tax on exports of nickel, pig iron and nickel iron, which could be introduced as soon as this year.

Concerns about falling shipments from the world's largest nickel supplier have sent the London Metal Exchange benchmark index soaring to its highest level in more than a decade.

That could raise costs for Chinese stainless steel mills, the biggest users, and join a host of commodities that are becoming a growing headache for battery makers as prices climb.

Indonesia plays a key role in global markets as a supplier of bulk materials, but President Joko Widodo has pledged to eventually halt all raw material exports in a bid to turn the country into a major manufacturing hub for electricity transport.

The Indonesian government hinted in September that nickel restrictions were coming and said it would halt shipments of bauxite and copper ore, with the eventual goal of producing all electric vehicle components, including lithium batteries, onshore.

The central concern for Chinese companies is their reliance on Indonesia for about 84 per cent of domestic imports of ferronickel, a semi-refined product used to make stainless steel.

Battery metals are in the midst of an unprecedented boom in the global push to slow climate change, with lithium soaring to record levels and cobalt doubling in the past year.

A sustained rally could push up battery costs for the first time since at least 2010, hurting automakers and potentially discouraging consumers from buying electric vehicles.

Indonesia's domestic focus is likely to spur more overseas investment in downstream sectors. The Indonesian government said in September that production of an electric vehicle battery plant jointly owned by Hyundai Motor Group and LG Energy Solutions would begin in May.

Nickel has been a key focus for Tesla, with billionaire owner Elon Musk previously expressing concerns about future supply due to the challenges of sustainable sourcing and soaring demand as the world increasingly shifts to electric vehicles.

去年的金属被击中的突破性的技术logy developed by Castle Peak Holdings LTD., the world's largest stainless steel producer, which allowed it to supply large quantities of products that can be processed into battery-grade materials using its existing Nisi smelter in India.

Base metals were broadly lower by 2:32 p.m., with nickel down 1.1% at $21,820 a ton on the London Metal Exchange. Shanghai, after hitting its highest level since August 2011 on Wednesday. Copper fell 1.4 per cent and aluminium fell 1.1 per cent.