A surge of cheap Indonesian nickel is flooding the global market, driving down prices and threatening the stability of the Australian nickel industry.
Amidst this crisis, come calls for electric vehicle (EV) manufacturers to pay a premium for Australian nickel, given its cleaner and greener attributes.
While this could see the costs transferred to consumers, it aligns with the values of many EV buyers who prioritise environmental and social sustainability over cost.
Australia boasts significant deposits of high-quality nickel, crucial for lithium-ion batteries that power most electric vehicles. However, the industry is up against a flood of cheaper, less environmentally friendly Indonesian nickel that is supported by substantial Chinese investment.
Indonesia's strategic policy to ban the export of unprocessed nickel in favour of domestic processing has led to a boom in its nickel industry. But the environmental toll of Indonesia's nickel production — characterised by deforestation, air quality degradation and labour rights issues — starkly contrasts with the more sustainable practices of Australian nickel mining.
This disparity has prompted the Australian Government and the nickel industry to advocate for a "clean, green premium" on Australian nickel, appealing to EV manufacturers' and consumers' environmental consciousness.
Make the most of competitive advantages
Resources Minister Madeleine King emphasised the need for EV manufacturers to adopt materials that meet the highest environmental standards, suggesting that consumers are willing to pay more for vehicles that are truly sustainable.
"We should know that if we're going to do this work to decarbonise using battery storage, we need to do that in a responsible manner as well,” said King.
"We need those metals that go into batteries to be as clean and as green as they should be. There will be a premium paid, but the premium's not any more than the price of production — which is what was being paid not that many years ago."
This stance is supported by international movements towards transparency and sustainability in battery production, with the European Union implementing labelling rules to indicate the carbon footprints of batteries.
The strategic implications of the global nickel market dynamics are also significant, with China's investment in Indonesian nickel aimed at maintaining a competitive edge in the industry.
Australia's response includes forming partnerships with the United States and Canada to promote the superior environmental, social and governance (ESG) standards of minerals sourced from their territories.
As King said. "We have developed these really high standards over a long period of time, and the situation is different in our competitor nations nearby. We have to make the most of those competitive advantages."