Tsingshan plans nickel smelter in Indonesia powered by renewables

World’s top nickel and stainless steel maker plans to build solar and wind facilities to power a 2,000MW smelter in eastern Indonesia within the next three to five years

by Tim Daiss

Chinese steel and nickel producer Tsingshan Holding Group, the world’s top nickel and stainless steel maker, plans to build a 2,000-megawatt ‘clean-energy’ facility in Indonesia within the next three to five years, while laying the groundwork for further green development, the Wenzhou-based company said last week.

It will build solar and wind power stations needed for the plant. As well as supporting facilities at its Tsingshan and Weda Bay industrial parks in Indonesia.

The plant will supply power for the company’s production of raw materials used in batteries for electric vehicles (EVs). Tsingshan wants its battery-materials operations to have net-zero carbon emissions. It already holds investments in Indonesia for battery-grade nickel chemicals production. It has been trying to expand its footprint in the new energy sector.

Earlier this year, the firm unveiled plans to make battery-grade nickel from material reserved for stainless steel. However, that process usually uses smelters that consume large amounts of coal for power generation. It is making Tuesday’s announcement even more important.

Tsingshan also announced plans to supply nickel matte. It is a main feedstock to produce nickel sulphate, to domestic cobalt smelter Huayou Cobalt and new energy materials producer CNGR. Last July, the group started trial nickel matte production with more than 75% content of the metal to meet increasing EV battery demand.

Chinese firms like Tsingshan have been stepping up their focus on EVs in China, the world’s largest car market, as Beijing promotes greener vehicles to help reduce high air pollution levels, particularly in its major urban centres.

EV MANUFACTURERS’ CATCH-22

EV car manufacturers, however, have been caught in a seemingly Catch-22 situation over its need for nickel. On the one hand, they need more nickel production for EV batteries. They also need to address the carbon footprint coming from production of the metal. 

Tesla Motors founder Elon Musk last July pressed miners to produce more nickel. The cost of batteries remained a large hurdle for the company’s growth. However, he is also pushing for cleaner nickel production at the same time. A call that some in the industry say may still be hard to come by.

“Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way,” Musk said on a post-earnings call at the time. Tesla needs more nickel supply to support not only its increased auto manufacturing numbers. They also need it for larger vehicles and trucks.

While some analysts say that nickel is still in abundant supply, others claim supply could be stretched by the end of the decade. Nickel demand is expected to increase from 2.2 million metric tons to somewhere in the range of 3.5 million to 4 million metric tons by 2030.

“The current challenge is to nearly double supply while meeting environmental, social, and corporate governance (ESG) requirements.”

Nickel is crucial for EV battery efficiency. It makes batteries energy dense so cars can run further on just a single charge. It’s now widely viewed to be the second most expensive component of EV batteries. EVs, for their part, will comprise 58% of global passenger car sales in 2040. Compared with 10% by 2025, according to a Bloomberg NEF report.

SE ASIA TOPS NICKEL PRODUCTION

Indonesia passed the Philippines in 2018 to become the world’s largest nickel producer and could soon pass Canada and Australia combined. 

Indonesia had 13 operating nickel smelters with an input capacity of 24.52Mt by the start of 2020. And another 22 nickel mines are under development, government data shows, while Jakarta is trying to boost the sector. Indonesia holds about a quarter of all global nickel reserves. 

Meanwhile, several junior miners, such as Vancouver-based Giga Metals Corp and Canada Nickel Co are also planning to produce more environmentally friendly nickel. However, that may still not be enough ‘clean’ producers of nickel for EV makers in the long-term.

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