PT Vale Indonesia Tbk (INCO) is optimistic that nickel demand for electric vehicles (EVs) will remain strong, despite the sentiment of McKinsey & Company's research which states that 29% of electric car owners globally are considering switching to fossil-based fuel cars.

Chief of Sustainability and Corporate Affairs Officer of Vale Indonesia, Bernardus Irmanto, said nickel is the main material in the production of more efficient and durable batteries. On the other hand, improvements in battery technology will continue to require a stable supply of nickel.

Bernardus underlined that nickel for electric car batteries has a high energy density, which provides a solution for a more durable range compared to other types of batteries.

"The production cost of nickel-based batteries, with continuous innovation, is also expected to gradually decrease and reduce the price of electric cars," Bernardus told Bloomberg Technoz, quoted Saturday (27/7/2024).

The nickel processing complex operated by PT Vale Indonesia in Sorowako, South Sulawesi, Saturday (11/6/2022). (Dimas Ardian/Bloomberg)

In addition, Bernardus said that the policies of countries in the world to encourage the production, sales and use of electric cars are also still very strong.

Vale did not deny that there are currently challenges in the adoption of electric vehicles – one of which is in the form of infrastructure – conveyed in the research. However, that does not mean that EV adoption will not occur.

"It may only take longer than previously projected. After all, EVs are part of the solution to tackle climate change. Without EV adoption, it will be difficult for us to achieve the targets that have been agreed," he said.

HPAL Project

Furthermore, Bernardus said Vale's high pressure acid leaching (HPAL)-based refinery or smelter projects in Pomalaa and Sorowako are designed to meet the need for high-quality nickel required for EV batteries.

Despite the challenges identified in the McKinsey & Company study, Bernardus said, Vale believes global demand for high-quality nickel will continue to increase as the world works to reduce carbon emissions and switch to cleaner energy sources.

"We will continue to work with various stakeholders to ensure that the infrastructure and technology that supports EVs can evolve in accordance with market needs," he said.

Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif in a working meeting with Commission VII of the House of Representatives of the Republic of Indonesia said that the nickel mine in Sorowako will be operational in 2027, while the HPAL smelter is in the process of drafting a definitive cooperation agreement with Huayou. The investment value reaches USD 2 billion.

The factory will produce MHP which is a raw material for electric vehicle batteries. In addition, the processing facility is targeted to be able to produce 60,000 tons of nickel and 5,000 tons of cobalt per year in the form of MHP.

Meanwhile, the nickel mine in Pomalaa will operate in 2026, where related to the HPAL smelter has signed a definitive agreement. The investment value reached USD 4.6 billion.

The HPAL-based smelter project with a capacity of 120,000 tons of nickel in MHP format is located in the Pomalaa Block. This project is the result of INCO's joint venture with Huayou and Ford Motor Co which was signed in March last year, which formed a joint venture company called PT Kolaka Nickel Indonesia (KNI).

For information, the McKinsey survey involved more than 3,000 respondents in 15 countries. The survey covers more than 80% of world car sales.

The country with the most respondents who answered that they want to return to fuel cars is Australia with 49%, followed by the United States (46%), and Brazil (38%).

The highest reason for those who want to return to fuel cars is inadequate electric charging facilities (35%). Others are expensive maintenance costs (34%) and difficulty driving long distances (32%).