During the Indonesia-Africa Forum currently taking place in Bali, senior diplomats from the Asian country proposed that Indonesia seek a $3.5 billion trade agreement with African countries.
Indonesia is a well-known nickel exporter. With at least 50% of its nickel being exported, it is one of the world’s largest nickel exporters. However, that also constitutes a pain it has been trying to deal with.
Nickel is key for making batteries for electric vehicles (EVs). And Indonesia, knowing fully well that it cannot make EVs itself, opted to build hubs to make car batteries using its nickel.Â
Then the big EV companies came circling to invest in its smelting facilities. As at 2023, Indonesia had built 54 nickel smelting facilities, with 16 more under construction. Indonesia has since aggressively pursued its battery production goal.
This is why trade with Africa is important; it will collaborate with resource-rich African countries to import finishing minerals like lithium that, when used with nickel, can produce batteries that power EVs and other electronic devices.
Yet, there may be another reason. Most African countries are net importers of palm oil, one of Indonesia’s top exports. Due to the seasonal fluctuations, limited arable land resources, and farmers choosing to practice subsistence farming, the production of palm oil in Africa has been insufficient in the past. In 2020, African nations imported nearly 8 million tonnes of palm oil.
Prior to this agreement proposal, Indonesia did little business with Africa. However, with this development, Indonesia can export more of its top products to Africa, and import mineral resources to fuel its battery production drive. Then, it can export these finished goods back to Africa. The trade agreement in place will also secure better import duty rates for the Global South. It is yet to be seen if Indonesia has any production nous to pull this off.