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Specter of Cartelization in “Battery Criticals” Segment Should Kick Efforts to Bolster Domestic Supply Chains into High Gear — A Look at Nickel

As global leaders direct their focus towards the COP27 climate change summit kicking off in Sharm El Sheikh this upcoming Sunday, pressures on critical mineral supply chains – particularly those for the “battery criticals”underpinning EV battery and energy storage technology — continue to mount.

While for some time, much of the “battery critical” focus was primarily on lithium, this has shifted. See our recent pieces on graphite and cobalt here and here, respectively. Now, with Indonesia’s investment minister hinting at the possibility of Jakarta pursuing the creation of an OPEC-like cartel for nickel (and other key battery metals) the spotlight is falling on nickel.

As the largest nickel producer with the largest known reserves of the material, Indonesia is considered the “nickel capital of the world.”

As the Financial Times reports, the country’s investment minister Bahlil Lahdalia declared in an interview that the Indonesian government is studying “the possibility to form a (…)  governance structure [similar to OPEC] with regards to the minerals we have, including nickel, cobalt and manganese” adding that he saw “the merit of creating OPEC to manage the governance of oil trade to ensure predictability for potential investors and consumers.”

Observers were quick to point out that “any attempt to form a cartel to control global prices for nickel would be far from straightforward.”

Writes Tsvetana Paraskova for Oilprice.com:

“Unlike the oil resources of OPEC’s producers, the mining operations in Indonesia and other major nickel producers are controlled by various private companies or Chinese entities. Moreover, the biggest producers and holders of nickel deposits are a diverse group of countries with very different political and market conditions and unlikely to have common ground and interests in forming a cartel.”

However, the looming specter of battery material cartelization – first introduced earlier this year by South American Lithium producers — should be reason enough for U.S. stakeholders to kick the buildout of domestic battery supply chains into high gear wherever possible.

As recent U.S. developments suggest, efforts are already underway.

The first recipients of federal funding disbursed under the 2021 infrastructure law to “supercharge” U.S. manufacturing of batteries for electric vehicles and the electric grid included the Tamarack Nickel Project in central Minnesota.  As ARPN has noted, the project had previously been awarded  $2.2 million  to fund an effort 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.  Bringing the supply chain home could not only inoculate the U.S. from trade issues on the critical minerals front, but could also help reduce the industry’s — arguably large — carbon footprint.

With talk of nickel cartels and resource nationalism on the rise, the establishment of a secure U.S. nickel supply chain can’t come soon enough.