Indonesia Nickel Industry: The Carbon Problem Behind the Boom
Indonesia’s nickel industry has transformed the country into the world’s dominant nickel producer and a critical player in the global electric vehicle (EV) battery supply chain.
But Indonesia’s nickel boom has a major problem: carbon emissions.
Much of the nickel used in batteries and stainless steel is processed in energy-intensive smelters powered by coal. This creates a striking contradiction: a mineral essential to the clean-energy transition can have a significant carbon footprint before it reaches an EV battery.
Why Is Indonesia the World’s Largest Nickel Producer?
Indonesia possesses enormous nickel reserves and has aggressively developed its domestic processing industry.
Government restrictions on exports of unprocessed nickel encouraged companies to build mines, smelters and refining facilities inside Indonesia. The strategy attracted billions of dollars in investment and helped Indonesia produce nearly two-thirds of the world’s mined nickel in 2024.
But processing all that nickel requires enormous amounts of electricity.
Coal Is Indonesia Nickel’s Carbon Problem
Many nickel smelters are located in remote industrial areas without sufficient grid electricity. Companies have responded by building captive coal-fired power plants to supply their facilities.
According to World Resources Institute research, around 97% of electricity used during the final furnace stage of Indonesian nickel smelting comes from industry-operated coal power.
Smelting accounts for approximately 97.9% of emissions from Indonesia’s nickel sector.
That matters because nickel is widely used in several EV battery chemistries. If battery materials are processed using coal, significant emissions are generated before an electric vehicle reaches the road.
Can Indonesia Produce Green Nickel?
Indonesia has already demonstrated that lower-carbon nickel production is possible.
At Sorowako in South Sulawesi, hydropower supplies much of the electricity used for nickel production. According to WRI, the transition toward hydropower eliminated approximately 2.3 million tonnes of CO₂-equivalent emissions annually while also lowering production costs.
Expanding renewable electricity could therefore turn Indonesia’s carbon challenge into an economic opportunity.
Hydropower, solar, wind, energy storage and expanded transmission networks could gradually replace captive coal generation at major nickel-processing hubs.
Green Nickel Could Be Indonesia’s Next Competitive Advantage
Global automakers and battery manufacturers are increasingly examining emissions throughout their supply chains.
That could eventually create greater demand for low-carbon or “green nickel.”
Indonesia already has the nickel reserves, processing infrastructure and global market dominance. If it can reduce dependence on coal, it could become not only the world’s largest nickel supplier but also a major producer of cleaner nickel.
Indonesia won the race for nickel production volume.
The next challenge is producing that nickel with fewer carbon emissions — and that could determine the country’s position in the next phase of the global EV and critical-minerals market.
Source: Jakarta Globe
