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New “Critical” in the Crosshairs — NGOs Call on Automaker to Terminate Nickel Investment Plans in Indonesia

Already burdened with increasingly volatile supply chains in the wake of the coronavirus pandemic, rising geopolitical tension and Russia’s war on Ukraine, automakers’ drive towards net zero emissions is facing an additional challenge as environmental, social and governance pressures on the industry increase.

The latest case in point concerns one of the new materials on the U.S. Government’s Critical Minerals List — nickel:

Earlier this week, dozens of environmental non-governmental organization (NGOs) sent an open letter to Tesla CEO Elon Musk and company shareholders, asking that the company terminate plans to invest directly into Indonesia’s nickel industry over concerns that the company’s plans would result in disposing of mining waste into the ocean, increased deforestation, and overall pollution.

The NGOs further demanded that the company ban nickel sourced and produced in the country from being used in any of Tesla’s business lines.

The letter, according to Reuters, was sent in the wake of a meeting between Indonesia’s President Joko Widodo and Musk in Texas in May to discuss the company’s potential investments.

A critical ingredient in lithium-ion battery technology, nickel has been in the crosshairs of automakers’ worries for quite some time, even before Russia’s invasion of Ukraine.  Experts were issuing warnings that global demand for EV battery grade nickel could outstrip supply by 2024, and Elon Musk famously called on global mining companies in 2020 to boost production of nickel in early 2020, when he publicly announced:

“Any mining companies out there … wherever you are in the world, please mine more nickel. (…)  Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way. (…) Don’t wait for nickel to go back to some high point you experienced five years ago (…).”

The good news is that while Indonesia may be the biggest producer of nickel globally, and U.S. nickel production had been considered “objectively very lame,” as Musk lamented on Twitter that year, things are changing.

U.S. President Joe Biden in March of this year invoked the Defense Production Act to encourage domestic production of the metals and minerals deemed critical for electric vehicle and large capacity batteries, including nickel, and the Administration has acknowledged that “the need to domestically produce more metals is rising as EV’s go mainstream, but that new mines must not harm the environment.” 

The mining industry is ready to meet this challenge and has increasingly been harnessing advances in materials science and technology to help develop domestic critical minerals supplies while maintaining and advancing responsible mining practices.

Followers of ARPN may recall Tesla’s recent deal with Talon Metals Corp, developing a new nickel project in Minnesota, which Elon Musk singled out“due to plans to make the electric vehicle battery metal in a way it considers more environmentally friendly.”

As we outlined, this is the mine site for which the U.S. Department of Energy recently announced a $2.2. million award to fund to a Rio Tinto-led project to achieve carbon capture by a process that mineralizes the carbon in rock – a process far more stable than methods that inject carbon, where it remains vulnerable to seepage and fracturing due to earthquakes.

This may not be a silver bullet for the auto industry’s nickel woes — but, as the Indonesia situation shows, to ensure supply chain security for its manufacturers critical mineral needs, the U.S. is well-advised to pursue a comprehensive all-of-the-above approach to resource policy that promotes the domestic — socially and environmentally responsible — production and processing of critical materials.