Nickel will play a crucial role in global climate change efforts due to its use in batteries, particularly electric vehicle batteries and energy storage options. As the United States and other countries transition from traditional cars to battery electric vehicles (BEVs) and replace greenhouse gas-emitting fossil fuels with renewable energy, global demand for lithium is expected to explode.
However, geopolitics may complicate America’s transition to electric vehicles and hamper its vision for a carbon-free economy. For example, China has made significant investments in the supply chain for battery metals and currently controls most of the globe’s nickel extraction and refining, making the U.S. almost entirely reliant on China for an incredibly key raw material. With tension between the U.S. and China on the rise, experts fear that China may leverage the power its nickel refining monopoly grants it to retaliate against the U.S.
Geopolitical tensions between the two nations may also hamper U.S. efforts to secure nickel from Indonesia, a nation with the largest reserves of nickel on the globe. Since Indonesia largely relies on China to extract and refine its immense nickel reserves, it has limited access to the U.S. market.
Furthermore, certain policies in the United States may be actively preventing battery and automakers from leveraging Indonesian nickel reserves. President Joseph Biden’s Inflation Reduction Act (IRA) has a clause that provides subsidies to electric vehicle companies that produce EVs with a greater share of raw materials produced locally or in nations deemed friendly to the U.S.
Luhut Binsar Pandjaitan, Indonesia’s coordinating minister for Maritime Affairs and Investment, has spent the past few months trying to broker a trade deal with the Biden administration that would see Indonesia supply key minerals such as nickel to the U.S. The deal would also cement Indonesia’s status as a friendly nation to the country, making automakers who use Indonesian coal eligible for EV credits and boosting demand for nickel from the southeast Asian nation.
However, U.S. leaders have rebuffed Luhut’s efforts repeatedly due to concerns about China’s involvement in Indonesia’s nickel supply chain as well as apprehensiveness over environmental standards and working conditions. In fact, unease about China’s dominance in various critical fields in the U.S. is so great that it is one of the few topics that has garnered the support of both Democrats and Republicans.
However, some lawmakers argue that the Biden administration’s anti-China stance is myopic when compared to the existential threat of climate change. They say increasing access to Indonesia’s gargantuan lithium reserves is of “greatest urgency” because nickel is a key element in the transition from dirty fossil fuels to renewable energy.
Efforts are underway to develop battery metal supply chains in North America and other jurisdictions considered friendly. For example, Canada Nickel Company Inc. (TSX.V: CNC) (OTCQX: CNIKF) is focused on availing high-quality nickel on a scale that is second only to China and Indonesia. These supplies could ease America’s reliance on China-sourced battery metals.
NOTE TO INVESTORS: The latest news and updates relating to Canada Nickel Company Inc. (TSX.V: CNC) (OTCQX: CNIKF) are available in the company’s newsroom at http://ibn.fm/CNIKF
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