In a difficult year for an IPO, the Indonesian capital is changing its mind. The Jakarta Stock Exchange saw a record volume of IPOs in the first quarter. The $800 million raised in this issue exceeded those raised in the Hong Kong or New York stock markets during the same period. Most of the money came from the public listing of Pertamina Geothermal Energy, the green subsidiary of the state-owned oil and gas giant. This could be the start of Indonesia's clean energy IPO boom. On April 12, Harita Nickel, a battery metals fabricator, launched the nation's largest IPO in nearly a year, raising nearly $700 million at a valuation of about $5 billion. By the end of this month, Merdeka Battery Materials, another nickel company, plans to raise more than $500 million.
Nickel plays a central role in Indonesia's efforts to become a clean energy superpower. The country has one of the largest reserves of both raw materials in the world. In an effort to capture more high-margin metallurgy and battery manufacturing markets, the government banned raw nickel ore exports a decade ago. The successful IPOs of Harita and Merdeka proved that politics worked. But the industry has also highlighted some uncomfortable trade-offs that come with the global battery business.
The first group of commitments concerns the environment. Mining and smelting nickel is a dirty business. JATAM , a network of NGOs , accused Harita of confiscating land on Obi Island, where a reservoir is located, and polluting surrounding waters. Harita disputes claims and has support from local and national governments. The company is making a proposed investment in a 300-megawatt solar plant by 2025 in Obi as evidence of its efforts to diversify from the coal that currently powers its operations.
Western investors and nickel buyers are still nervous under pressure from environmental activists and do-it-yourself consumers. This unrest must be measured against the group's desire to accelerate the energy transition. More electric cars must be brought onto the market if western climate goals are to be met: last year, only one in four cars sold in China and Europe and one in four in America was electric or hybrid. Without Indonesian nickel, achieving net-zero emissions will be harder than ever.
The second set of commitments concerns geopolitics. The United States and Europe want to reduce dependence on authoritarian China for all types of technology, including clean energy. Western governments are likely to spend up to trillions of dollars to stamp out green manufacturing by Chinese companies, from refining key minerals to making batteries and solar panels. However, China's involvement in the industry will remain a reality for many years to come. This also applies to Indonesia, where Western companies often work with Chinese companies. In March, Ford partnered with a local company, PT Vale Indonesia, to construct a $4.5 billion nickel processing plant on the island of Sulawesi. The other partner is the Chinese company Zhejiang Huayou Cobalt.
Other westerners may still shun Indonesian nickel. In this case, a less fearful opponent will gladly join. Last year, LG Energy Solution and CATL of South Korea, rivals of China's biggest battery makers, started building new foundries in Indonesia. In March, South Korean industrial conglomerate POSCO announced plans to build a joint nickel processing plant with Ningbo Richin, another Chinese metallurgy company. ■
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