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By Sharon Kimathi, Energy and ESG Editor, Reuters Digital

Hello!

Australia is entering the clean energy incentives chat in today’s newsletter as the Land Down Under plans to unveil a range of measures to drive investment in the local green sector.

The plan aims to keep money and talent from being pulled overseas by subsidies in the U.S. and Europe, the Australian Financial Review reported.

Like countries across the developed world, Australia is responding to the massive raft of clean energy incentives in U.S. President Joe Biden’s $430 billion Inflation Reduction Act and the European Commission’s Green Deal Industrial Plan.

Also on my radar today:

• Lufthansa strike hits air travel for second time this month
• Climate activists dump pink powder on case containing US Constitution
• Tractors roll into downtown Prague as Czech farmers join protests

An aerial view of a nickel mining site of Vale in Sorowako, South Sulawesi province, Indonesia. REUTERS/Ajeng Dinar Ulfiana

If Australia is to become a renewable energy superpower, “the government has to be a partner in this, not just an observer,” Prime Minister Anthony Albanese said in a speech on Friday.

“We don’t have to go dollar-for-dollar in our spending, but we can go toe-to-toe on the quality and impact of our policies . In all of this, we must be prepared to think big,” Albanese said.

The government scheme is likely to be a combination of subsidies and co-investments, the AFR report said, citing unidentified sources.

Australia classified nickel as a “critical mineral,” opening the way for the crisis-hit industry to access billions of dollars in government support.

The country’s nickel sector is facing thousands of job cuts after a jump in Indonesian supply saw prices plunge 40% in a year.

China and Indonesia are set to reduce nickel output by at least 100,000 metric tons this year as producers seek to limit losses following a slump in the price of the metal used in stainless steel manufacture and for electrical vehicles (EVs), traders and analysts said.

They added further cuts would be needed if producers wanted to boost prices and remove the surplus from the market, rather than just halt losses.

Nickel prices had surged in 2022, peaking at a record above $100,000, on expectations of reduced supplies from major producer Russia following its invasion of Ukraine.

Now the metal is trading around $16,000 a ton after production rose in Indonesia, which last year accounted for more than half of global mined supplies, estimated at around 3.4 million metric tons. Indonesian supplies were 30% of the total in 2020.

As the extra supply compounded the impact of economic weakness that lowered demand, Western miners – including Aussie-based mining company BHP, which had made nickel core to its green strategy – delayed projects or reduced production.

Australia is the world’s fifth-largest producer of nickel ore and the recent decline in prices has rendered much of the industry unprofitable.

An increase in supply from Indonesia has cratered prices, as the Southeast Asian nation successfully boosted production of refined and semi-refined nickel, largely on the back of an export ban on raw ore, which in turn led to massive investment from China in new processing plants.

Currently about 65% of nickel is used to make stainless steel, but this percentage is expected to decline in coming years as more of the metal is used in batteries needed to drive the switch to electric vehicles and renewable power generation with storage backup.

Australia’s move to support its nickel miners is a short-term fix, and a longer-term solution is needed, writes Clyde Russell, Asia commodities and energy columnist at Reuters, in a comment article here.

Keep scrolling below for today’s ESG Lens feature by Breakingviews columnist Anthony Currie on what Australia needed to do to avoid its nickel problem.

Police officers help a car stuck in the snow in Fuyun county, Xinjiang Uighur Autonomous Region, China. cnsphoto via REUTERS

Krista Shennum, researcher at Climate Rights International, interviewed 45 people living near smelting operations at the Indonesia Weda Bay Industrial Park (IWIP) and nearby nickel mines on the island of Halmahera. Here is an extract of what she found:

“The transition from gas-powered cars to electric vehicles is an essential part of the global transition away from fossil fuels to renewable energy, but the growing critical mineral industry must not perpetuate the same abusive and environmentally harmful practices followed for decades by extractive industries.

“Global automakers that source nickel from Indonesia, including Tesla, Ford, and Volkswagen, should take steps to ensure that nickel used in their electric vehicles is not driving human rights and environmental abuses.

“Adlun Fikri, a 29-year-old Sawai activist from Sagea, summed up to Climate Rights International how many local residents feel about IWIP and related mining:

 ‘In the upstream area where they mine, it’s destructive, degrading forest, destroying forest, and causing human rights violations. The local residents here bear the cost for global ambition [of net zero]. Western people enjoy the electric vehicle, and meanwhile we get the negative impact.’

“It is an unacceptable, false climate solution to build new captive coal plants to power nickel processing operations and to deforest such large areas for nickel mining.”

Breakingviews: The recent nickel rout is exposing the paucity of smart long-term planning by Western miners and governments alike. That’s especially apparent in Australia, where Canberra and a state government are offering taxpayer incentives to try to help the industry. But it’s too little, too late.

Granted, miners have not had it easy. The price of the silvery-white metal that goes into electric-vehicle batteries almost halved over the past year, in part due to nickel-heavyweight Indonesia using a new production process allowing it to increase supply.

A flurry of aid won’t do much to close the gap. Western Australia, for example, on Saturday said it would halve the 2.5% royalty it collects whenever the average price in a quarter is below $20,000 a tonne. At the current level, that would save miners just $200 a tonne. And they would eventually have to pay it back over 24 months.

Ornithologist Lourdes Mugica checks a mist net to capture birds, at Havana’s Botanical Garden, in Havana, Cuba. REUTERS/Norlys Perez 

Today’s spotlight follows the efforts of bird scientists in Cuba monitoring migratory mysteries.

University of Havana professor Daniela Ventura is gathering fresh data points in a project that aims to unravel mysteries about how and where migratory birds from the United States and Canada spend their winters in Cuba.

“We know a lot about their ecology in the breeding zone (in North America) but very little about what happens in their wintering zone,” Ventura said in an interview.

“Birds don’t understand embargoes or geographic borders, they don’t need a visa to enter our country,” she said. “I hope there comes a time when relations are normal and that we can have joint projects between (the U.S. and Cuba).”

Part of the problem is politics, said Lourdes Mugica, an ornithologist who helped to organize the research. A U.S. Cold War-era embargo, which restricts trade and financial transactions on the Caribbean Island, has long complicated cooperation – even in science – between the U.S. and Cuba.

Mugica and Martin Acosta, pioneering ornithologists in Cuba, say this project – with partnership from Environment and Climate Change Canada – hints at what is possible.

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