CRITICAL MINERALSThe Global Race to Secure Critical Minerals Heats Up
The World Trade Organization last week ruled that Indonesia had no right to ban the export of nickel or to require that raw nickel ore be refined in Indonesia. Handing a comprehensive victory to the complainant, the European Union, the WTO decision highlights the clash between national security and global trade rules over critical minerals.
The World Trade Organization last week ruled that Indonesia had no right to ban the export of nickel or to require that raw nickel ore be refined in Indonesia.
Handing a comprehensive victory to the complainant, the European Union, the WTO decision highlights the clash between national security and global trade rules over critical minerals.
At least 14 nations, including Australia, have drafted special national-security-focused arrangements governing investment and trade in critical minerals. Nickel—a crucial input of batteries and stainless steel—is on seven of those lists.
Indonesian President Joko Widodo made clear that the WTO ruling won’t be the last word on the matter. ‘Even though we lost at the WTO on this nickel issue … it’s okay. I have told the minister to appeal,’ he said.
The WTO’s appellate body is defunct, with the US having refused to approve the appointment of new tribunal members since 2017, so the appeal will stay the decision until there’s a resolution, which may never occur.
US President Joe Biden’s administration has shown little interest in trade policy and hasn’t explained what would satisfy it to re-establish the appeals tribunal. The EU led the creation of an alternative WTO body to handle appeals, but Indonesia isn’t a party to it. Indonesian officials have said they have five to 10 years to build their domestic processing capability.
The WTO said the only justification for Indonesia’s export ban would be if there were a critical shortage of an essential material, but that’s not the case. The EU argued that the Indonesian action breached the WTO requirement that countries grant as much access as possible to international trade.
Indonesia was the world’s biggest supplier of nickel until the export ban, imposed in 2020. Chinese resource groups have responded to Indonesia’s call for investment in nickel smelters and downstream processing. Chinese investment in Indonesia reached US$3.6 billion in the first half of this year, double last year’s level, with new smelters mainly behind the increase. Indonesia has also imposed restrictions on export of coal, copper and aluminum. Possible new bans on tin and lead are now being considered.
‘We want to be a developed country, we want to create jobs. If we are scared of being sued, and we step back, we will not be a developed country,’ Widodo said.
