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 of these are must-haves in electric vehicle production. 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 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 said on Dec 21.
The export bans have benefited the country. Nickel export earnings reached US$20.9bil (RM92bil) in 2021 and are expected to exceed US$30bil (RM133bil) in 2022. In comparison, the value of nickel exports was only US$1.1bil at the end of 2014.
The eastern regions of Maluku and Sulawesi – where most of the nickel reserves are located – enjoyed huge economic growth, said Arsjad.
“That’s the impact from just one commodity – 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, 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 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 Straits Times/ANN
