Nickel offers a case study of the complex challenges the world faces in ramping up the use of minerals needed to drive the global clean energy transition. 

Demand for nickel stems from its use in electric vehicle batteries as an alternative to the far more common lithium. Nickel mines are also a source of cobalt, another mineral critical to batteries. 

Nickel stands out as the one key mineral that is not refined mostly in China (and instead in Indonesia), according to the International Energy Agency’s latest outlook on minerals critical to the energy transition.  

But don’t let geography fool you. Although a plurality 37% of the world’s nickel refining occurred last year in Indonesia, Chinese companies were responsible for more than 80% of that supply and 40% of the raw mining, according to IEA. For its part, Indonesian firms hold just 10% of the nickel mining in the country. Plus, more than a quarter (28%) of nickel refining does, in fact, also occur within China. 

China monopolizes the mining and refining of various minerals key to the battery production supply chain and beyond, including graphite and cobalt.  

The high concentration of lithium, nickel, cobalt and rare earth mineral refining in any single country is concerning for IEA, which fears “a risk of significant shortfalls in supply, if for any reason, supply from the largest producing country is interrupted.”

The geographic dominance of Indonesia is expected to increase. By 2040, IEA projects Indonesia to expand its nickel refining share to 59%, while China’s drops to 8%. Chinese share of Indonesian nickel refining is expected to drop over the next nine or so years to 54% as Western investments increase, according to a Benchmark Mineral Intelligence forecast.