Jakarta. A senior government official said Friday that Indonesian nickel would always be in demand, dispelling worries that it would lose to lithium ferro-phosphate (LFP) batteries.

The usage of LFP versus nickel-based NMC batteries in EV production remains a subject of debate. An NMC battery combines nickel as well as manganese and cobalt. LFP is nickel-free, and its rise has sparked concerns over whether Indonesian nickel would lose its popularity in the global market. Some EVs distributed in Indonesia are also using LFP batteries.

“Don’t worry. Whether we [Indonesia] use LFP or NMC, especially since our automotive market is small, our nickel will always be used for battery materials, stainless steel production, and many more,” Rachmat Kaimuddin, a deputy at the Coordinating Ministry for Investment Affairs, said in Jakarta.

According to Rachmat, NMC has some advantages over their LFP counterparts, arguing that nickel-based batteries have higher density and perform better. 

“We typically find NMC batteries in high-end cars, although they can be more expensive especially when nickel price soars. However, the NMC batteries fare better than their LFP counterparts in extreme temperatures such as during winter. LFP batteries usually run out in the snow, … even though they may be more affordable,” Rachmat said.

Despite Indonesia’s rich nickel reserves, the Southeast Asian country has an infinitesimal share in the entire automotive market. Rachmat claimed Indonesia only represented 2 percent of the global automotive market. Two-thirds of the market are scattered in 3 regions: China, Europe, and the US. China represents a third of the said market, while both Europe and the US hold one-sixth each.

"All these three regions have winter," Rachmat said.

With Indonesia being a tropical country, it would not matter whether EVs in Indonesia pick LFP or NMC batteries. But whatever battery it favors is very unlikely to shape the global market's battery preference, considering Indonesia's incredibly small share in the automotive market, according to Rachmat.

He added: “We [Indonesia] are focusing on electrifying our vehicles. ... High-end EVs would usually go for NMC batteries. Low-end EVs would focus on affordability, so I guess it’s okay if they [the manufacturers] wish to use LFPs, as long as their production plants --be it NMC or LFP-- are in Indonesia.”

The 2024 US Geological Survey report shows Indonesia’s nickel reserves amount to 55 million metric tons. Followed by Australia (24 million metric tons). Indonesia is pursuing the domestic processing of its natural resources, including nickel, as a means to attract investment and spur economic growth. Indonesia has stopped exporting unprocessed nickel ores. 

The nickel-versus-LFP discourse emerged during the vice presidential debate earlier this year.

Gibran Rakabuming Raka, the running mate to the front-runner Prabowo Subianto, at the time, asked his rival Muhaimin Iskandar whether he was “anti-nickel”. Previously, Thomas Lembong -a senior member of Muhaimin’s campaign team-- said that EV producer Tesla was switching to LFP batteries for its China-made cars.