Nickel, a vital component in electric vehicle (EV) batteries and stainless steel, is undergoing significant shifts in supply dynamics and pricing. Recent moves by Nickel Industries and market responses to global economic conditions present a complex landscape of challenges and opportunities in the nickel sector.
Nickel Industries, an Australian company, is strategically positioning itself in Indonesia to potentially become one of the largest nickel resource holders globally. In August 2024, the company finalized agreements to acquire the Sampala project and secured a 51% stake in the Siduarsi project. These strategic maneuvers come amidst a severe nickel ore shortage in Indonesia, leading to a remarkable 45% surge in local nickel prices since late 2023.
Justin Werner, Managing Director of Nickel Industries, emphasizes the importance of these acquisitions in mitigating the impact of ore shortages and soaring prices. The Sampala project holds a substantial resource of 2.3 million metric tons of contained nickel metal and 200,000 metric tons of cobalt, with potential for significant expansion up to 10 million metric tons of nickel metal. This positions it among the top five known nickel resources globally.
Nickel Industries aims to kickstart ore shipments by the end of 2025, ensuring a self-sufficient ore supply for its operations in the Morowali Industrial Park. The Siduarsi project has unveiled an initial resource of 52 million dry metric tons with a promising nickel grade of 1.1%, anticipated to grow further. These strategic moves solidify Nickel Industries’ position as a key player in the global nickel market.
While Nickel Industries captures attention with its Indonesian acquisitions, broader market trends are influencing nickel prices worldwide. The London Metal Exchange (LME) reported a decline in nickel prices to $15,873 per metric ton by the end of October 2024, following a brief spike to a four-month high of $18,153 per ton earlier in the month.
This drop was largely attributed to waning investor enthusiasm post-China’s stimulus measures, which failed to meet expectations for aggressive economic support. China’s economic health is crucial for nickel prices, as it is the world’s largest consumer of industrial metals. After an initial uptick in investor confidence following China’s stimulus package announcement, prices retreated as manufacturing activity remained subdued.
Data from S&P Global Commodity Insights highlights major market events impacting LME 3M nickel prices, with a notable increase in stocks of Russia-origin nickel in LME warehouses despite a ban on new deliveries from Russia. This surge in inventory, coupled with reduced investor confidence, has exerted downward pressure on LME nickel prices.
Indonesia’s production strategy is a focal point in the global nickel landscape. The country’s energy and mineral resources minister outlined plans to regulate nickel ore production to balance supply and demand. Despite challenges posed by a new domestic mining approval system leading some producers to import nickel ore from the Philippines, Indonesia saw a 14.5% year-over-year increase in primary nickel output in the first eight months of 2024.
As Indonesia aims to reduce China-based ownership to qualify for the U.S. Inflation Reduction Act of 2022, the country’s potential to drive global nickel production growth becomes evident. Careful management of production levels positions Indonesia as a leading supplier in the nickel market.
Looking ahead, S&P Global analysts have revised their nickel price forecasts, upgrading the LME nickel price projection for the December quarter to $16,583 per ton following October’s price fluctuations. Although there is a projected surplus in global primary nickel output growing annually at almost 6% over the next four years, uncertainties stemming from Indonesia’s evolving mining policies could impact this outlook.
The recent developments within Nickel Industries and the broader nickel market highlight the dynamic nature of this crucial metal industry. The future of nickel hinges not only on Indonesia’s local production strategies but also on global economic conditions and investor sentiment.
