A tricky clean energy opportunity in Indonesia
Indonesia has long sidestepped larger geopolitical conflicts. But now, as it becomes a hub for electric vehicle production, it’s getting caught in the rivalry between the U.S. and China.
At stake is control over nickel, a critical component of E.V. batteries. Indonesia, with the Earth’s largest reserves, is something like the Saudi Arabia of nickel. It is carefully guarding that resource with an export ban on ore: If foreign companies want Indonesia’s raw nickel, they must invest.
The country has drawn more than $14 billion in foreign investment, primarily from Chinese companies. Chinese investment has generated much-needed jobs. But that upward mobility has a downside: pollution and social strife on the island of Sulawesi.
And the U.S., concerned about the influence of China, is refusing to offer Indonesia a trade deal that would mean even more investment and jobs.
I reached out to Peter Goodman, our global economics correspondent, for more insight on the high stakes for Indonesia.
What stood out to you most about the situation in Indonesia while reporting this story?
I hadn’t been in Jakarta for 30 years, since I lived there at the beginning of my journalism career in the early 1990s. It was extraordinary to see how much the city had developed — the emergence of fancy shopping malls with high-end restaurants, new housing, a shiny subway system and the obvious presence of a thriving middle class. But when I got out to the island of Sulawesi, it was equally startling to see how little had changed in communities far from the capital. Here was poverty, limited infrastructure and the willingness to accept horrifying pollution for jobs. Above all, I was struck by the sense of purpose, the designs on taking advantage of the country’s mineral wealth in an age of electric vehicles to advance development.
What’s the biggest difference between the way China and the U.S. are dealing with Indonesia here?
Chinese officials and companies identified earlier than anyone else the strategic importance of nickel in an era of electric vehicles, and the reality that Indonesia possesses critical stocks. They invested quickly and aggressively, unbothered by endemic corruption and loose environmental and workplace safety standards. The U.S., by contrast, was late to appreciate the significance of Indonesia in the electric vehicle supply chain. And even as the Biden administration crafts policy designed to secure American access to critical minerals, other considerations — discouraging Chinese investment, avoiding involvement with environmental destruction and labor strife — are constraining action.
And in China: When Beijing tried to cool its housing market, it created a bigger problem, and fallout from debt-laden developers and sinking sales spread to the broader economy.
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Elsewhere in the war: Ukrainian commanders are more confident now that they’re on the offensive. Despite tough fighting and heavy casualties, they say their forces are in better shape now than just months ago.
A Russian missile slammed into the main square of Chernihiv, Ukraine, on Saturday, killing at least seven people and injuring more than 100, including 12 children, officials said.
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