Jakarta, CNBC Indonesia – The good news came this week, the government revealed the possibility of two companies producing the world’s electric vehicle batteries, namely Contemporary Amperex Technology Co. Ltd. (CATL) and LG Chem Ltd will invest around US $ 20 billion or the equivalent of Rp 296 trillion (assuming an exchange rate of Rp 14,800 per US $) in the battery project in Indonesia.
Bloomberg on Wednesday (14/10/2020) wrote, the two companies had signed an initial agreement (Heads of Agreement) with PT Aneka Tambang Tbk (ANTM) last month to generate added value from Antam’s nickel products.
This was conveyed by Septian Hario Seto, Deputy of the Coordinating Ministry for Maritime Affairs and Investments Bloomberg.
He said the investment from the two world companies will develop the nickel processing industry business into electric vehicle battery components.
Indonesia, which has almost a quarter of the world’s nickel reserves and this is the key to developing electric cars, will use the potential of nickel to build a battery factory in the country.
The price of nickel itself had fallen to its lowest level in 15 months in March due to the corona virus disease pandemic (Covid-19), which caused demand to decline.
Launching data from Investing, on March 23, prices benchmark nickel on the London Metal Exchange touched the level of US $ 10,887.5 / metric ton, this level is the lowest since January 4, 2019.
But after that, nickel prices went up. Today, Friday (16/10/2020) was at the level of US $ 15,602.5 / metric ton, soaring more than 43% from that low. Meanwhile, when compared to the position at the end of last year or on a year-to-date basis, nickel shot more than 11%.
The future for nickel also looks bright, even though it slumped in the first quarter of 2020. The World Bank (World Bank) in the April edition of the Commodity Market Outlook suggested that nickel will continue to climb in the long term.
This year, the average nickel price is predicted to fall by 17 percent to US $ 11,617 / metric ton from last year’s average price. Next year, the average price is predicted to be US $ 11,932 / metric ton, up 2.71 percent from this year.
The World Bank provides a projection that until 2030 the average nickel price will be US $ 15,182 / metric ton, or an increase of more than 30% from this year’s average.
BHP Nickel West boss, Eddy Haegel, said that in the future nickel demand will experience a drastic increase following the energy revolution that will occur in the world.
“You have heard from me before, that we are in the early stages of a revolution that will transform our world and increase demand for nickel. Obviously nickel is the winner in the decarbonization of the world,” Haegel said, as quoted by Antara Livewire Markets, Friday (16/8/2020).
“Nickel will remain the champion, even if many metals or metal combinations are tested to make lithium-ion batteries, nickel remains the metal that provides the highest energy density. This makes nickel a bright future,” he added.
Haegal predicts nickel demand will increase at the end of this year. Meanwhile, in the next 30 years, BHP Nickel West sees nickel demand will be 250% higher than the last 30, it could even reach 350% when the world is getting serious about decarbonization in response to global warming.
Seeing these predictions, nickel can be an attractive investment. Abroad, nickel investment can be done through derivative instruments, but in Indonesia it is still not available.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)
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