Indonesia’s severe drought threatens to disrupt China’s vast battery industry
A severe drought in Indonesia is slowing output of a crucial material used to manufacture electric vehicle batteries, creating risks across China’s vast electric car supply chain. Indonesia is a vital link in the global electric car supply chain. The Southeast Asian nation is the world’s biggest production hub for nickel, a metal that is converted into a component used in lithium-ion batteries.…
A prolonged drought in Indonesia is causing disruptions to the global electric vehicle battery supply chain, particularly in China. The Southeast Asian country is the world's largest producer of nickel, a vital component in lithium-ion batteries. However, the severe drought has led to reduced output at nickel refineries, where water is essential for high-pressure acid leaching.
One major facility in Central Sulawesi province has cut its production capacity to 30% from 50% due to water shortages. Market analysts predict that similar cuts will occur across the industry this month, potentially causing a decline in nickel production for mixed hydroxide precipitate, an essential battery component. Indonesia, responsible for over half of global nickel production, is currently experiencing the impact of a strong El Nino weather pattern.
About three-quarters of Indonesia's nickel refining industry is invested in by Chinese entities. The drought has increased production costs and reduced profitability for these Chinese investors, who may delay new project expansions and improve efficiency in existing ones.
Written by urgent.news from SCMP Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
