Reading the tea leaves, page-15

In my opinion, ESG is only a factor if there is little or no cost implications. Most consumers don't care, so there isn't much pressure on companies to actually do anything about ESG. Then again, there seems to be growing demand from investors to improve ESG performance.

Currently, Indonesia has an ESG problem. Their mining practices are environmentally damaging, they treat their workforce like crap, they don't care about the local communities that suffer negative impacts from mining, and their coal-fired power supply creates a lot of carbon emissions. But, if you want to buy battery grade Nickel in large quantities, you probably have to accept the current situation in Indonesia.

I believe the Indonesian government is highly motivated to improve their ESG performance to help them secure agreements with partners in the US and EU. The Indonesian President is visiting Australia this week with the stated intention of collaborating with Australia to jointly create a battery supply chain.

The Sunrise project is compelling because of low carbon emissions and stable jurisdiction, but it comes with a very high capex compared to Indo HPAL projects. The EU and US need to be mindful of diversification in their battery materials supply chain, so they should be wary of becoming over-reliant on Indo Nickel. In my opinion, even if ESG issues are less important, Sunrise can still be financed by partners who have an interest in diversifying their supply chains away from Indonesia.