Only half of nickel smelters to be built in Indonesia this yr-industry (Reuters U.S. – July 8, 2015)

JAKARTA – Nickel producers in Indonesia may only build half of the 12 new smelters anticipated this year and some may not commence production immediately due to low global prices, a senior industry official said.

Indonesia, which had been China’s top nickel ore supplier, brought in export restrictions last year aimed at forcing mining firms to build smelting and processing facilities so the country could earn more from raw ores and concentrates.

I.D. Susantyo, chairman of the Indonesian Nickel Association, expected only five or six nickel smelters would be completed by the end of the year. That is half the number anticipated by the mining ministry in April.

Susantyo said not all of the smelters built this year would start production as global prices drop to six-year lows of around $10,700 a tonne, nearly half of their peak last year.

“With nickel prices dropping like this, even though they are completed, they may not be able to produce because the market price is lower than the cost of production,” he said.

“Investors must think if their investments can make a return within two or three years. If this won’t happen, they won’t invest.”

To produce one tonne of nickel in Indonesia, it costs producers around $14,000 a tonne with blast furnace technology and $13,000 a tonne using electric furnaces, he said.

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