Indonesia shock for car manufacturers – NISK offers hope: Mercedes-Benz, Ford, Power Metallic Mines

China dominates even in Indonesia

There was great turmoil following media reports about Indonesia's nickel industry: in addition to contaminated soil and discolored seas, reports of huge illegal dumps in the rainforest and social injustices also drew criticism. Around 12 million tons of toxic waste were discovered in the rainforest, and people were expropriated for mining projects or employed in mines without adequate occupational safety measures. In addition to these ESG violations, China's dominance in the Indonesian market is causing uncertainty – Chinese companies dominate around 75% of nickel refineries in Indonesia. Car manufacturers such as Mercedes-Benz and Ford, which only invested in an Indonesian nickel processing plant together with partners in 2023, will have to rethink their strategy or at least diversify.

Ford and Mercedes-Benz: Focus on economic efficiency and sustainability

When reading the annual reports or websites of major car manufacturers, the focus is often on sustainability and a green future. However, the reality is not as flawless as the PR rhetoric. Ford is attempting to make its own business more sustainable through many small measures. These include the use of lithium iron phosphate batteries, which do not require nickel or cobalt but are heavier, as well as investments in recycling. Together with Redwood Materials, Ford is investing in programs in the US to recycle used batteries. A battery factory is also planned in the US state of Michigan in collaboration with CATL.

Mercedes-Benz is also paying attention to sustainable supply chains, investing in recycling and, like Ford, increasingly focusing on direct investments in promising raw material projects. In 2022, during a German delegation trip to Canada, Mercedes signed an agreement to secure access to critical minerals in collaboration with the Canadian government and local mining partners. For example, a supply contract for 10,000 tons of lithium hydroxide per year starting in 2026 was agreed with the German-Canadian company Rock Tech Lithium. Canada could also become an alternative for car manufacturers when it comes to nickel.

NISK project in Canada aims to supply battery metals in an almost CO2-neutral way

Although the Indonesian government has announced its intention to investigate the allegations and improve the situation surrounding nickel mining in Indonesia, car manufacturers should diversify their sources simply because of their heavy dependence on China. The NISK project in the Canadian province of Québec is home to a high-grade polymetallic deposit containing nickel, copper, cobalt, platinum, and palladium – and, according to independent rankings, is located in one of the safest and most mining-friendly jurisdictions in the world. NISK is located near the town of Nemaska in the James Bay area and has excellent infrastructure: road access, an airport within reach, and immediate access to affordable hydroelectric power thanks to a Hydro-Québec substation within sight. These factors are crucial because they allow the mine to be powered by virtually CO₂-free electricity. In addition, the nickel ore is located at relatively shallow depths, which facilitates open-pit mining. The special feature of NISK is the surrounding ultramafic rock, which can capture CO₂ from the air, allowing waste material to serve as a natural "CO₂ sponge."

NISK is also impressive from a geological point of view: in 2024, a drill hole in the Lion sub-area yielded an average of 7% copper equivalent over a distance of 32 meters – a grade more commonly found in the legendary deposits of Norilsk in Russia. Another detail also leads geologists to draw parallels with these world-class deposits rather than Indonesian mines: unlike the Indonesian laterite nickel mines, NISK is a sulfide deposit. This offers cost advantages for possible future processing. Added to this is the location of the project in stable Canada, which offers good conditions for mining companies in addition to high environmental standards. All these key data position NISK as a climate-neutral, geopolitically stable and at the same time extremely profitable source of nickel – a strong, unique selling point compared to the competition from Indonesia.

Power Metallic Mines and NISK have convinced several billionaires

The NISK project is backed by Power Metallic Mines. Just last February, the Company succeeded in securing financing of CAD 50 million. Among the investors are Robert Friedland, Rob McEwen, and Gina Rinehart, all billionaires with foresight and commodity expertise. Power Metallic Mines' share price has risen by almost 29% in the past six months, valuing the Company at around EUR 214 million. At a time when security of supply is crucial for commodities and ESG continues to play a major role, investors should keep an eye on Power Metallic Mines – one of the most promising battery metal mines in the Western industrialized world is emerging here.

(image: z-terry-lynch-power-metallic-mines.png link: https://us06web.zoom.us/webinar/register/WN_Bltxe4jfT-KvTa3VPCvapQ#/registration