Indonesia’s nickel boom tests Western green sensibilities
In a challenging year for initial public offerings, Indonesia’s capital is attracting attention. The Jakarta Stock Exchange experienced record IPO volumes in the first quarter. The $800m raised in these flotations surpassed the amounts generated on Hong Kong’s or New York’s stock exchanges during the same period. The majority of the funds came from the listing of Pertamina Geothermal Energy, a green subsidiary of the state oil-and-gas giant. This may just be the beginning of Indonesia’s clean-energy IPO boom. On April 12th, Harita Nickel, a company that processes the battery metal, achieved the country’s largest IPO in almost a year, raising nearly $700m with a valuation of around $5bn. Later this month, Merdeka Battery Materials, another nickel firm, aims to raise over $500m.
Nickel plays a central role in Indonesia’s aspirations to become a clean-energy powerhouse. The country possesses one of the world’s two largest reserves of this material. In an effort to capture more of the higher-margin markets for metal-processing and battery production, the government banned the export of raw nickel ore a decade ago. Harita’s and Merdeka’s successful IPOs demonstrate the impact of this policy. However, the industry also highlights some of the difficult trade-offs involved in the global battery business.
The first set of trade-offs is environmental. Extracting and smelting nickel is a dirty trade. JATAM, a network of NGOs, has accused Harita of engaging in land grabs on Obi island, where it operates a smelter, and of polluting the surrounding water. Harita denies these allegations and has the support of local and national governments. It promotes a planned investment in a 300-megawatt solar-power plant for 2025 as evidence of its efforts to move away from coal, which currently powers its operations on Obi.
2023-04-13 08:28:56
Original from www.economist.com
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