ITragic A year of initial public offerings, Indonesia’s capital is turning heads.Jakarta stock exchange hits record listing sales in the first quarter. The $800 million raised by those listings exceeds what was raised on the Hong Kong or New York stock exchanges during the same period. Much of the funding came from the listing of Pertamina Geothermal Energy, the green subsidiary of the national oil and gas giant.This could be just the beginning of clean energy in Indonesia listing Prosperity. On April 12, Harita Nickel, a company that processes battery metals, completed the country’s largest listing In almost a year, nearly $700 million was raised at a valuation of about $5 billion. Later this month, another nickel company, Merdeka Battery Materials, aims to raise more than $500 million.
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Nickel is at the heart of Indonesia’s efforts to become a clean energy superpower. The country has one of the two largest reserves in the world. The government banned the export of raw nickel ore a decade ago in an effort to capture more of the higher-margin markets in metal processing and battery manufacturing. Harita and Merdeka blockbuster listingShow that the policy is having an impact. But the industry has also highlighted some troubling trade-offs involved in the global battery business.
The first set of tradeoffs is environmental. Mining and smelting nickel is a dirty business. Jatama network non-governmental organizations, accusing Harita of grabbing land on Obi Island, which houses the smelter, and polluting the surrounding waters. Harita has denied the claims and has the support of local and national governments. It has announced plans to invest in a 300-megawatt solar power plant by 2025, as evidence of its efforts to diversify away from the coal that currently fuels Obi Island operations.
Western investors and nickel buyers remain jittery under pressure from environmental activists and domestic virtuous consumers. This discomfort must be weighed against the desire of these groups to accelerate the energy transition. More electric cars must be on the road if the West’s climate goals are to be met: only a quarter of cars sold in China and Europe last year were electric or hybrid, compared with a quarter in the US one. Without Indonesian nickel, achieving net zero emissions would be even more difficult than it is now.
The second set of trade-offs involves geopolitics. The U.S. and Europe want to reduce their reliance on authoritarian China for a variety of technologies, including clean energy. Western governments could end up squandering $1 trillion in orders to wrest green manufacturing from the Chinese companies that dominate everything from the extraction of key minerals to the manufacture of batteries and solar panels. However, Chinese involvement in these industries will remain a fact for years to come. The same is true in Indonesia, where Western companies often find themselves partnering with Chinese firms. In March, Ford partnered with a local company to PT Vale Indonesia, to build a $4.5 billion nickel processing plant in Sulawesi. Another of their partners is the Chinese company Zhejiang Huayou Cobalt.
Other Westerners may still avoid Indonesian nickel. If so, less prim competitors will be happy to step in.South Korea last year LG energy solutions and CATL, its larger battery-making rival from China, each broke ground on a new smelter in Indonesia.March PohangA South Korean industrial conglomerate has announced that it will jointly build a nickel processing plant with another Chinese metals company, Ningbo Liqin. ■
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