The Indonesian government is aiming to include nickel shipments in its online tracking system in an attempt to improve governance. 

Indonesia’s mining minister, Arifin Tasrif, has revealed plans to include nickel shipments in the government’s online system, known as SIMBARA, from next year. The system traces the movement of ores from mining through to buyers and the government hopes to create “measurable, orderly, and controlled” shipments in the supply chain. As well as announcing the tracking system, the minister also revealed that a task force would be set up to reach a trade agreement with the USA.

Indonesia’s push to secure global dominance of the nickel supply chain means that this year it is estimated to have accounted for slightly over 50% of global mined and 40% of refined nickel supply. However, a ‘ramp-up at all costs’ mentality at many of the country’s nickel operations has negatively impacted environmental and governance performance. Environmentalists attribute poorly regulated mining and rapid expansion to deforestation and pollution in some of its nickel hubs. Concerns relating to this are especially pertinent given Indonesia’s push to secure a limited trade agreement with the US that would see Indonesian-sourced nickel and its other critical minerals qualify for Inflation Reduction Act (IRA) incentives.

On 13 November, US President Joe Biden held constructive bilateral talks at the White House with Indonesian President, Joko Widodo, on a range of topics including the potential agreement of a trade agreement. Reports suggest that a number of US senators are unhappy at the prospect of Indonesian nickel operations receiving tax incentives, given that the majority have been developed through substantial Chinese investment. An additional sticking point for an agreement relates to the aforementioned concerns over poor ESG practice in Indonesia, an unease that appears to be widely held by those involved in Western battery supply chains. Even so, it is possible that, given the sheer scale of the raw materials required rapidly by OEMs’ ambitious EV rollout targets, many companies may be forced to relax key priorities of their nickel procurement strategies, including ESG.