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The country will continue
to support mixed hydroxide precipitate (MHP) production, according to deputy of
investment and mining coordination Septian Hario Seto.
Speaking on Tuesday, May
2, at Fastmarkets’ Asian Battery Raw Materials Conference in Singapore, Seto
said the Indonesian government was “not going to be issuing any new permits for
NPI smelters in Indonesia.”
He told delegates: “We
are also reviewing [licenses for] nickel matte [and], for the time being, we
are going to remove the tax incentives for nickel matte production.”
The move comes in
response to concerns over a lack of availability of nickel ore to support
Indonesia’s growing nickel operations.
Indonesia is the world’s
largest producer of nickel and is a major growth area for new Class 2
production, including NPI, nickel matte and MHP.
“Our total capacity
as of 2022, was around 1.8 million tonnes of nickel metal,” Seto told
delegates. “Of this, around 145,000 tonnes is MHP.
“This 1.8 million
tonnes of capacity is supported by 177 million tonnes of nickel ore,” he said,
“If we complete all nickel capacity expansions currently in the pipeline -
around 1 million tonnes - this would require an additional 150,000,000 tonnes
of nickel ore. [But] we don’t have that much nickel ore.
Industry sources estimate
that Indonesia’s total capacity could reach closer to 4.3 million tonnes of
nickel. bit Seto described that target as potentially too ambitious.
“We don’t have
enough nickel ore to support that,” he said.
Seto acknowledged,
though, that competition to access nickel ore in the country was fierce.
“The game is the
battle of resources, all producers are fighting for the mined ore,” he said.
Nickel MHP favored due to
cost competitive advantages
Indonesia introduced a
ban on nickel ore exports in January 2020 in a move designed to drive up the
domestic refining of nickel. But, even with the bans put in place, Seto said he
does not believe that there is not enough domestic ore capacity to meet the
global nickel demand from Indonesia.
MHP has become the
favored product among Chinese nickel sulfate producers due to its cost
competitive advantages compared to traditional methods of production from
nickel metal.
And Seto told delegates
that the government will “continue to support MHP,” with licences and tax
incentives for production.
Fastmarkets assessed the
nickel mixed hydroxide precipitate payable indicator, % London Metal Exchange,
cif China, Japan, and South Korea at 70-73% on Friday April 28, down 1% on the
previous range.
Fastmarkets researchers
currently forecast that the global nickel market will experience a surplus of
around 139,000 tonnes this year, while the International Nickel Study Group
(INSG) forecasts an even larger surplus of 239,000 tonnes for 2023.
The surplus will be
driven by increasing supplies of Class 2 - or nickel intermediate - products,
particularly from Indonesia.
Any move to curb the
production levels of nickel from Indonesia could have significant implications
on global supply and demand balances, delegates told Fastmarkets on the
sidelines of the Singapore conference.
Seto, nonetheless, said
that Indonesian MHP production will continue to grow.
“By 2027, MHP
capacity [in Indonesia] will be close to 1 million tonnes,” he said.
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