Manufacturers and investors should beware the reputational and operational risks of dealing in Indonesian nickel
Earlier this month, the US government sounded the alarm over the use of forced labor in the nickel mines of Indonesia.
The finding has major implications for the energy transition because large amounts of nickel are needed to produce electric vehicle (EV) batteries and other low-carbon energy technologies.
The Department of Labor’s recent forced labor determination could push Jakarta into further dependence on China and Chinese firms.
On September 10, the United States Department of Labor (DOL) added Indonesian nickel to its list of goods produced by child or forced labor. Nickel is a critical mineral with applications in steelmaking, aircraft engines and turbines, and perhaps most prominently in renewable energy and vehicles, where it is one of the key components of nickel-manganese-cobalt (NMC) lithium-ion batteries.
This listing highlights the dominance of Indonesia’s nickel sector by Chinese firms and deals yet another blow to the country’s aspirations to secure a critical minerals-specific free trade agreement (CMS-FTA) with the United States.
LONDON, Sept 17 (Reuters) – Russian president Vladimir Putin’s suggestion that Moscow should consider capping exports of nickel in retaliation for Western sanctions has been greeted with a collective shrug by the market.
The London Metal Exchange three-month price has managed a weak bounce through the $16,000-per metric ton level but the momentum is already fading. This is a far cry from February 2022, when Russia first invaded Ukraine. Fears that metal from Russian giant Norilsk Nickel might have sanctions imposed generated a monster rally in 2022 that morphed into a full-blown meltdown of the LME nickel market.
LONDON, Sept 17 (Reuters) – Russian president Vladimir Putin’s suggestion that Moscow should consider capping exports of nickel in retaliation for Western sanctions has been greeted with a collective shrug by the market.
The London Metal Exchange three-month price has managed a weak bounce through the $16,000-per metric ton level but the momentum is already fading. This is a far cry from February 2022, when Russia first invaded Ukraine. Fears that metal from Russian giant Norilsk Nickel might have sanctions imposed generated a monster rally in 2022 that morphed into a full-blown meltdown of the LME nickel market.
A South African company is reported to be the most probable bidder for shares in New Caledonia’s Prony Resources. As part of an already advanced takeover of the ailing southern plant of Prony Resources, the most probable bidder is reported to be South African group Sibaneye-Stillwater, local media reported on Monday.
Just like the other two major mining plants and smelters in New Caledonia, Prony Resources is facing acute hardships due to the emergence of Indonesia as a major player on the world market, compounded with New Caledonia’s violent unrest that broke out in May.
(Bloomberg) — European makers of stainless steel are turning to Indonesia for nickel as the country’s booming output forces plants in other countries to shutter.
Exports to Europe of Indonesian nickel pig iron — an ingredient for stainless steel used primarily by Chinese producers — to Europe have surged to 87,485 tons this year from just 1,006 tons in 2023, according to Indonesian government data. The Netherlands, Italy and the UK have taken the shipments, the data show.
(Bloomberg) — Chinese billionaire Xiang Guangda’s battery company is hunting for more US investment opportunities despite mounting geopolitical tension between the world’s economic juggernauts. REPT BATTERO Energy Co., a unit of Xiang’s Tsingshan Holding Group Co., this week opened an office in California, marking its first US outpost.
REPT “is surely giving full respect to the world’s second largest energy storage market,” Chairman Hui Cao said during an interview. Although a specific target hasn’t yet been set, the aim is for the US to “contribute more than 10%” to REPT’s revenue.
(Bloomberg) — Indonesia’s government sees nickel prices stabilizing near current levels in the future, as new plants in the world’s biggest producer offset rising demand and keep the market well supplied.
Prices on the London Metal Exchange should hold around $15,000 to $16,000 a ton in the short to medium term, Septian Hario Seto, a deputy at the Coordinating Ministry for Maritime Affairs and Investment, said in a presentation in Bali on Thursday.
Wyloo Pty. Ltd. is a wholly owned portfolio company of Australian private investment group Tattarang Pty. Ltd. Tattarang is owned by Andrew and Nicola Forrest, serving as a holding company for the Forrest family’s private business interests. Tattarang also has a 35.15% interest in iron ore major Fortescue Ltd.
At the end of May, Wyloo put its Cassini and North Kambalda operations on care and maintenance in a bid to weather market oversupply caused by Indonesia flooding the market with cheap nickel.
Jakarta wants to help its industry qualify for tax credits under Joe Biden’s initiative to build a US electric vehicle supply chain
Indonesia is trying to reduce Chinese investment in new nickel mining and processing projects to help its industry qualify for tax breaks in the US, as the Biden administration seeks to curb Beijing’s influence in the electric vehicle supply chain.
Generous tax breaks are available from 2025 under President Joe Biden’s Inflation Reduction Act, but they will not apply to EVs containing batteries and critical minerals such as nickel sourced from “foreign entities of concern”, including some companies with more than 25 per cent Chinese ownership.
LONDON, July 23 (Reuters) – BHP Group’s ambition to create a green nickel hub in Western Australia is on hold after the world’s largest listed miner announced the entire division will go on care and maintenance later this year.
The company has invested $3 billion since 2020 to turn Nickel West into a major supplier of nickel sulphate for use in electric vehicle (EV) batteries. A supply deal with Tesla Inc. was signed in 2021 for what BHP pronounced was “one of the most sustainable and lowest carbon emission” brands of nickel in the world.
LONDON, July 16 (Reuters) – Indonesia’s nickel production surge is crushing competitors and challenging the West’s ambitions of diversifying its critical metals supply chains. Australia’s BHP Group is the latest victim of a two-year price slump, which has seen London Metal Exchange three-month nickel tumble from an all-time high of $55,000 per metric ton in March 2022 to $16,650.
The world’s largest listed miner has announced it is suspending its Western Australia nickel operations from October. The decision was well flagged and probably made easier by the loss of feed from Wyloo Metals’ Kambalda mines, which were placed on care and maintenance in May, also due to low prices.
An influx of cheap nickel supply from Indonesia has all but killed off Western Australia’s long-running nickel sector. Nickel prices halved in 2023, dipping below $16,000 per tonne in December as surpluses widened. According to Benchmark Mineral Intelligence, Indonesia accounted for 49% of nickel production in 2023, up from less than 5% just eight years ago.
Nickel sector decimated
The impact on Australia’s nickel industry has been dramatic. ASX 200 producer IGO paid A$1.1 billion ($744 million) for nickel miner Western Areas in mid-2022. Just 18 months later, the entire value of the acquisition had been written off and the Cosmos development project was suspended, resulting in the loss of 400 jobs.
(Bloomberg) — BHP Group Ltd. will close its loss-making nickel business in Australia until at least early 2027, after a global glut of the metal spread havoc through the market.
The company will place its Nickel West business on “care and maintenance” from October due to low prices of the metal used in electric-vehicle batteries, it said in a statement Thursday. It will also halt the development of its West Musgrave nickel mine.
Global mining heavyweight Glencore says the future of its nickel and cobalt operations in Australia will hinge on keeping a lid on labour and energy costs and access to infrastructure.
In what shapes as another blow to Anthony Albanese’s critical minerals ambitions, Glencore warned it was closely monitoring the situation and the future of its Murrin Murrin mine in Western Australia, which employs about 1500 people and is the nation’s biggest source of cobalt.
