Indonesia locks in 2025 nickel ore mining quota

News Analysis

14

Jan

2025

Indonesia locks in 2025 nickel ore mining quota

Senior mining official claims quota issued at “…around 200Mt”, with 292 RKAB permits approved for nickel commodities, 207 of which have been approved for production.

Indonesia’s Director General of Minerals and Coal of the Ministry of Energy and Mineral Resources, Tri Winarno, stated that although the nickel ore mining quota had been set at “…around 200Mt”, this could be reduced if miners fail to comply with government requirements relating to environmental and other rules. This development comes after Indonesia extended the validity of companies’ mining plans, known locally as RKAB, to three years, from one year in late 2023. By comparison, the quota totalled 272Mt in 2024.

Restricting ore supply has been viewed as a potential tool for Indonesian authorities to address the oversupply in the global nickel market and support prices, which have hovered around the US$14–16,000/t mark for several months. However, delays to mine permit issuance have significantly affected local smelters, and the shortage has been particularly felt by operations at the Indonesia Weda Bay Industrial Park (IWIP). Demonstrating the impact of the reduced quotas, Eramet’s PT Weda Bay Nickel joint venture with Tsingshan reduced the operations’ 2024 volume target for external marketable nickel ore to 29Mwt, down from a previous 40–42Mwmt target.

This severe supply tightness has forced operators of Indonesian smelters to import record volumes of nickel ore from the Philippines to supplement domestic mine supply. As a result, in the first 11 months of 2024, Indonesian imports of Filippino ore ballooned to 10.0Mt, up from 0.3Mt in the previous year.

As Indonesia’s smelter capacity rises for the diverse range of intermediate and refined nickel products, including nickel pig iron (NPI), matte, mixed hydroxide precipitate (MHP), increased feedstock demand is expected to put pressure on domestic supply. In line with this, and to compensate for reduced ore availability, more imported material will likely need to enter the market. Indonesian importers of ore from the Philippines will inevitably have to continue competing against Chinese NPI producers. Such shortages will also increase competition to secure feedstock within Indonesia as producers at the country’s various industrial parks will be forced to ship ore from other islands – a situation that is complicated considering that the ore consumed at high-pressure acid leach (HPAL) plants is limonite (lower Ni content) compared to saprolite (higher Ni content).


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