Indonesian miner Trimegah Bangun Persada, better known as Harita Nickel, has an "end-to-end" audit underway by a major US automaker, Roy Arman Arfandy, the company's president director, told S&P Global Commodity Insights.
The integrated producer wants to be a pioneer in the country for passing US automakers' environmental, social and governance audits as it works toward certification of its metal for emerging battery passports, Arfandy said Sept. 20 on the sidelines of Benchmark Mineral Intelligence's Battery Gigafactories Asia Pacific 2023 conference in Tokyo.
The EU is working on a regulation to increase transparency in the battery supply chain, including by creating a "passport" that tracks material sourcing, carbon emissions and other details of a battery's journey all the way back to the mine. North American automakers are taking voluntary measures to track and share supply chain history with consumers.
"We have to be ready to implement that process from Day 1," Arfandy said. "We are not trying to be the last, following after everybody complies with that. We try to be the pioneer in Indonesia to comply as soon as possible."
Foreign companies that have invested in Indonesia include Japan's Toyota Motor Corp. and South Korea's Hyundai Motor Co.
Toyota's investments include a five-year plan outlined in mid-2022 to produce electric vehicles, with a budget of $1.8 billion. Hyundai formed a $1.1 billion joint venture with LG Energy Solution Ltd. in 2021 to build an EV battery plant targeting production in 2024, while the carmaker's Indonesian subsidiary started producing EVs in March 2022.
US-based Tesla Inc. approached the Indonesian government in 2020 about a potential investment in the country. In 2022, environmental groups asked the company to cancel its plans, flagging concerns about damage to the country's environment and communities resulting from nickel mining.
Indonesian miners have been grappling with environmental challenges including cleaning up tailings disposal and reducing coal reliance. Indonesia generated nearly 75% of its power from fossil fuels in 2021, including 41% from coal, according to S&P Global Market Intelligence data.
Arfandy outlined a number of projects to improve Harita Nickel's environmental footprint, including tree planting, rebuilding reefs, installing solar power, and building a coal dome and conveyor belt to reduce dust and lower emissions.
Indonesian miners fall on a spectrum of ESG compliance, with some doing well and others that "need to do a lot more even just reporting, let alone putting standards in place," said Harry Fisher, a Benchmark project manager who tracks nickel and cobalt markets.
"There is ambition from producers," Fisher said Sept. 21. "The entire supply chain will need to clean up to serve Western [original equipment manufacturers]. They're not going to accept lower ESG standards than other parts of the world."
Harita Nickel expects stable to slightly higher nickel prices for the rest of the year after the Indonesian government said it would not issue new mining quotas for 2023. The decision will likely tighten ore supplies, which hurts producers that buy their ore from other miners.
"We have our integrating mining operation, so we don't have any serious problem with that," Arfandy said.
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