The Indonesian Employers Association (Apindo) has warned that rising operational costs at high-pressure acid leach (HPAL) nickel smelters could threaten the competitiveness of the country's nickel-based electric vehicle (EV) ecosystem, even as the government plans to roll out incentives for nickel-manganese-cobalt (NMC) battery EVs.
Hendra Sinadia, Chair of Apindo's Mining and Minerals Committee, said HPAL smelter operating costs have risen sharply due to higher prices for raw materials such as sulphur and fuel, as well as the impact of various regulations. He cautioned that the effectiveness of any EV incentive package would depend on the industry's ability to absorb rising production costs. Without mitigating measures or balancing upstream incentives, the efficiency of the NMC battery supply chain could be undermined.
HPAL plants require significantly higher capital expenditure of approximately US $ 65,000/tonne of nickel capacity, compared to around US $ 13,000/tonne for RKEF pyrometallurgical smelters. The higher investment stems from the complexity of hydrometallurgical technology, which requires acid-resistant, high-pressure equipment and stringent waste management facilities.
Earlier, Energy and Mineral Resources Minister Bahlil Lahadalia confirmed that the government is preparing incentives for NMC battery EVs. He noted that Indonesia lacks the raw materials for LFP batteries, making nickel-based NMC batteries a more strategic choice. Despite higher production costs, he believes nickel-based EVs offer superior performance and greater competitiveness.
