Are Indonesian Nickel Pig Iron Smelters Losing Approval?

High-Grade Nickel Ore Depletion

As of June 12, 2024, it is anticipated that Indonesia’s high-grade nickel ore deposits will be exhausted by 2029. Already, nickel ore for stainless steel production needs to be imported from the Philippines. The Indonesian government is now considering revoking the licenses of some nickel pig iron smelters to conserve the dwindling reserves.

Depleting Nickel Reserves

Since early 2022, we have reported on Indonesia’s limited nickel ore reserves, which are depleting faster than previously assumed. Despite skepticism from some self-proclaimed experts, the Indonesian government has recently confirmed that high-grade nickel ore (1.7% nickel content) will be exhausted by 2029 at the current extraction rate. Low-grade nickel ore, mainly used for battery production, is expected to follow soon.

Government Actions on Smelters

In response to the rapid depletion, the Indonesian government aims to reserve remaining deposits for higher-value products. This includes considering the withdrawal of licenses for nickel pig iron smelters. Namun begitu, it is unclear if this will affect new or existing smelters.

Increased Nickel Ore Imports

Indonesia’s increased import of nickel ore from the Philippines, previously attributed to licensing delays, now suggests a reluctance or inability to issue more mining licenses.

Rising Nickel Prices

The Tsingshan Group’s recent expansion of its nickel listing on the London Metal Exchange (LME) indicates an expectation of rising demand and higher nickel prices this year.