From Minerals to Cars? Prospects for Upgrading Emerging Automotive Industries through Resource Policies

Résumé:

Purpose: Recent research suggests that the transition to environmentally more sustainable technologies opens Green Windows of Opportunity for economic catch-up for emerging countries (Lema and Rabellotti 2023). Regarding electric vehicles (EVs), research suggests that upgrading is challenging (Lema, Wuttke and Konda 2024) and that entry barriers to automobile production are unlikely to decrease (Schröder and Nguyen 2026). This investigation will seek to operationalise the rather vague notion of Green Windows of Opportunity concretely for the question of mineral resource-based EV value chain development.
Design: The study is based on a literature review of the concept of Green Windows of Opportunity and Global Value Chain literature to explore conceptually if and how emerging countries can utilise minerals to attract and localise emerging EV value chains. To operationalise theoretical questions, the study will look at two specific countries, namely Indonesia and South Africa. Indonesia is a relevant example since it possesses a large number of natural resources (both mineral and agricultural) that it seeks to utilise to promote development. Regarding EV value chains, it aggressively implemented an export ban on non-processed nickel ore to promote localisation of the EV value chain in the country (Schröder and Iwasaki 2024). South Africa is another relevant case since it also possesses a number of minerals which are relevant for EVs and the country considers if and how to leverage these resources for industrial development. As Indonesia in a sense was a first mover in natural resource-based EV strategy, its example can clarify feasibility of the approach as well as issues and pitfalls.
Findings: So far, Indonesia achieved partial success in economic upgrading its nickel resources. New, integrated mining and smelting complexes have been established, mainly by Chinese and Korean investors. Due to the export ban on unprocessed nickel ore, exports of intermediate processed nickel products surged, signifying increased domestic value addition. Simultaneously, the goal to establish an integrated value chain from mining to EV batteries and finally EV assembly is still elusive. Domestic EV assembly lacks behind regional competitors such as Thailand and Vietnam. More importantly, Indonesia’s upgrading cannot be described as exploiting a Green Window of Opportunity because of the negative environmental record of nickel mines. Environmental regulation has low standards, leading to deforestation, air and water pollution. Further, nickel smelters largely utilise domestic coal, meaning that these smelters actually contradict Indonesia’s transition towards more sustainable energy generation.
Practical and Theoretical Implications: The practical implications arising from this study are as follows. Mineral resources needed for electric cars can in principle be utilised to attract investment related to EV value chains. Simultaneously, the case of Indonesia suggests that investors may be attracted if environmental standards are low, thereby contradicting the idea of utilising a Green Window of Opportunity. Indonesian nickel is hardly processed in an environmentally and socially sustainable way. Thus, Indonesia only demonstrates that upgrading based on mineral resources is possible, but leaves questions if minerals can be utilised to exploit a Green Window of Opportunity. For South Africa, the implications are clear. If the goal is to utilise existing minerals for sustainable economic development, environmental regulations must be enforced in order to avoid trading minerals and limited upgrading for environmental destruction.