India has borrowed Indonesia’s export ban for a market that works nothing like nickel

India’s new ban on exporting lithium-ion battery black mass borrows the legal form of the best-known resource policy of the past decade, Indonesia’s ban on exporting nickel ore. The economics underneath are different. Indonesia’s ban worked as industrial policy because it controlled an input the world needed in enormous volumes, so processors moved to the ore. India’s black mass market is small, has few buyers and depends on collectors who can stop collecting. The useful lesson from Indonesia is less about whether export bans work than about who gains bargaining power when the export option disappears, and what that does to the supply of the material itself.

What India has prohibited

On 10 November the Directorate General of Foreign Trade amended the export policy for ITC(HS) code 85491400, which the notification describes as lithium-ion battery black mass, from “free” to “prohibited”, with immediate effect and until further orders. Black mass is the powder left after end-of-life batteries and battery manufacturing scrap are shredded. It contains recoverable lithium, cobalt, nickel and manganese. The government says domestic recycling and refining capacity “is not being fully utilised due to inadequate feedstock availability”, that some recyclers have had to import material, and that the ban complements the ₹1,500 crore incentive scheme for critical mineral recycling approved in September 2025. Commerce ministry release on the black mass prohibition

The ban replaces a leaky permit system. Black mass was already classified as hazardous waste, so exports needed permission from the environment ministry and a DGFT licence. EVreporter reported a year ago that several shredding facilities were nonetheless exporting it as non-hazardous material under other codes. Prohibition is easier to enforce than a licence that customs officers must second-guess. EVreporter on black mass export curbs and industry views

The policy completes a pair. Six days earlier the Cabinet approved ₹2,814 crore of capital support for lithium and nickel processing plants, which The Kakistocrat argued should be judged by supply that works in a disruption. One measure builds refiners. The other guarantees them feedstock.

How Indonesia used its ban

Indonesia’s 2009 mining law required domestic processing. The government banned nickel ore exports in 2014, relaxed the ban in 2017 when smelting capacity was not ready to absorb domestic ore, and reimposed a comprehensive ban from 1 January 2020. Before the ban Indonesia mined about 71 million tonnes of ore a year and exported about 65 million tonnes of it raw, mostly to China. Chinese firms, led by Tsingshan, responded by building smelters in Indonesia. Nickel-related exports rose from about $6 billion in 2013 to nearly $30 billion in 2022. Mining.com on the 2014, 2017 and 2020 phases · ASPI Strategist on ore volumes and Chinese investment · East Asia Forum on export values

The ban was not costless. A WTO panel ruled in November 2022, on a complaint by the European Union, that the export ban and the domestic processing requirement were inconsistent with Article XI:1 of the GATT and were not justified as a temporary measure against a critical shortage or as necessary to enforce domestic law. Indonesia appealed in December 2022 to an Appellate Body that cannot hear cases, which leaves the ruling in limbo. WTO dispute DS592

The mechanism matters more than the headline export numbers. Hiau Looi Kee of the World Bank and Enze Xie of Zhejiang University model the ban as pushing the domestic nickel price below the world price, because a few midstream steel firms gain buying power once miners cannot sell abroad. In customs data, the domestic value added of iron- and steel-using exporters rose about 5.6 per cent by 2022 relative to other industries. Average firm size in those industries fell, which the authors read as lower productivity, and they attribute the problem to incumbents with monopsony and monopoly power. Even in the success story, the first effect of the ban was a transfer from ore sellers to domestic processors. Kee and Xie, “Nickel, Steel and Cars”, November 2025

Three differences that change the result

Scale. Indonesia withheld tens of millions of tonnes a year from a market that had no ready substitute. India’s black mass market is measured in thousands. In February 2024 the founder of Lohum, the largest Indian recycler, estimated national output at 400–500 tonnes a month and his company’s share at about 70 per cent, with three or four regular producers. Output has grown since, but a Korean or Chinese refiner will not build a plant in India to secure volumes of that size. The ban hands the material to buyers already here. Fastmarkets interview with Lohum’s founder

Buyer concentration. The domestic refining capacity cited in the debate sits with a few firms. Attero says it can refine 15,000 tonnes of black mass a year, Rubamin 10,000 tonnes and Exigo 7,600 tonnes. On the other side are shredding-only recyclers, which one industry executive told EVreporter make up more than 80 per cent of the country’s lithium-ion recycling industry and receive better payments from overseas refiners. The two sides dispute the size of that gap. Exigo’s business head cited claims that Indian refiners pay about 2 per cent less, while others say international refiners offer much higher recovery rates. EVreporter on capacity and payables

Supply that responds to price. Indonesian ore stays in the ground if its price falls; mining margins shrink, but the resource does not vanish. Black mass has to be gathered from used phones, laptops and vehicle packs, often by informal aggregators, then transported and shredded. A lower price for black mass lowers the price that shredders can pay for scrap batteries, which reduces collection or diverts batteries to informal dismantling. The resource itself is elastic. That is the decisive difference from nickel ore.

Why small changes in payables matter

Black mass is priced as a percentage, or “payable”, of the value of the metals it contains. In early 2024 Indian material was reported to fetch 70 per cent of contained value delivered to Korea for nickel-cobalt-manganese black mass and 62.5 per cent for cobalt-rich lithium cobalt oxide material, which still dominates Indian scrap because it comes from consumer electronics. Fastmarkets on Indian black mass payables

Take an illustrative tonne of cobalt-rich black mass whose contained metal is worth ₹10 lakh. At a 62.5 per cent export payable, minus an assumed 5 points for freight and handling, the shredder nets ₹5.75 lakh. Suppose collecting, transporting and shredding the scrap costs ₹5 lakh. The margin is ₹75,000. If a domestic buyer without foreign competition offers 55 per cent, the shredder receives ₹5.5 lakh and the margin falls to ₹50,000, a cut of a third from a 2.5-point change in the payable. At 52.5 per cent, the margin halves. These numbers are assumptions, not market data. They show why a small change in bargaining power can have a large effect on whether collectors keep buying scrap batteries.

Europe chose a narrower tool

The European Union faced the same worry about black mass leaving for Asian refiners and chose a different instrument. In March 2025 the European Commission classified black mass as hazardous waste. Under the Basel Convention and EU waste shipment rules, that bans exports to countries outside the OECD, including China, while shipments within the EU and to other OECD members continue under prior notification and consent. China moved the other way, allowing imports of black mass that meets set standards as a non-waste product from 1 August 2025. European Commission on the black mass classification · National Law Review on the diverging EU and Chinese rules

	Indonesia, nickel ore (2020)	EU, black mass (2025)	India, black mass (2026)
Instrument	Export ban plus domestic processing requirement	Hazardous waste classification	Export prohibition
Destinations closed	All	Non-OECD countries	All
Scale of material	About 65 million tonnes a year exported before the ban	Large, with many refiners across the OECD	Thousands of tonnes a year
Buyers after the measure	Many foreign-built smelters, a few dominant	Refiners across the EU and OECD	A handful of domestic refiners
Main risk	Low domestic ore prices and concentrated processors	Higher costs inside the bloc	Weaker incentive to collect batteries

The case for a full ban

The strongest argument for the government is coordination. A refiner will not invest without dependable feedstock, and a shredder will not sell domestically without dependable buyers. A period of guaranteed domestic supply can break that deadlock, especially when domestic recovery has strategic value during import disruptions. A licensing regime had already failed to stop mislabelled exports. Overseas refiners with large scale can also outbid domestic plants for a while, which keeps India dependent on processing abroad.

Supply may also grow regardless of price. Lohum’s founder expects scrap from new Indian battery factories to reach as much as 20 GWh a year as about 200 GWh of manufacturing capacity is commissioned. Producers also carry extended producer responsibility obligations under the Battery Waste Management Rules, 2022, which give them a reason to deliver used batteries to registered recyclers whatever the black mass price. Fastmarkets on India’s expected scrap volumes

Those points justify keeping feedstock at home while domestic refining scales up. They do not justify ignoring the buying power the ban creates.

Tests that keep the ban honest

Four measures would show whether the prohibition is building an industry or redistributing margins. Publish a monthly benchmark of domestic payables against international reference prices less freight, by chemistry. Track formally collected battery tonnage and extended producer responsibility certificates against the years before the ban. Set a review date, after which the ban becomes a licence tied to the utilisation of domestic refining capacity, so exports resume if domestic buyers leave material unprocessed. Ask the Competition Commission to watch buyer concentration in a market where one firm reported a 70 per cent share.

The judgement would change with the data. If domestic payables stay within a few points of export netbacks and collected volumes rise, the ban is doing what Indonesia’s did at its best: solving a coordination problem. If shredders report stockpiles, collection falls or payables drift persistently below export parity, it is doing what the World Bank found in Indonesia’s midstream: moving rents to a few processors at the expense of the supply the policy needs.