Indonesia has expanded its nickel-processing industry through export restrictions and industrial policy, attracting investment in ferronickel, nickel pig iron, nickel matte and battery intermediates. Much of this capacity relies on coal-intensive power, creating challenges for Europe’s efforts to secure critical minerals while reducing emissions.
The EU’s Carbon Border Adjustment Mechanism (CBAM) covers ferronickel through its iron-and-steel categories, but refined nickel and several battery intermediates remain outside its scope. Carbon-border exposure therefore varies according to product classification and processing route.
Battery Supply and Emissions Requirements
European battery manufacturers need substantial nickel volumes while facing pressure to cut supply-chain emissions. Without broader CBAM coverage, they rely on procurement standards, battery regulation, sustainability reporting and customer requirements to address carbon intensity.
EU anti-circumvention measures could also scrutinise product changes primarily intended to avoid CBAM obligations.
Lower-Carbon Processing in Indonesia
Renewable power, grid upgrades and lower-carbon processing could strengthen Indonesia’s export position in markets increasingly focused on emissions.
Nickel highlights the limits of product-based carbon-border rules: CBAM affects selected intermediates, while broader supply-chain changes also depend on trade policy, battery regulation and raw-material partnerships.
