Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Top nickel producer China’s Tsingshan has cut ferronickel production in Indonesia due to persistent shortages of ore caused by delays to mining quota approvals, two sources with knowledge of the matter said.
Tight ore supplies this year has pushed up nickel production costs and resulted in Indonesian smelters buying the raw material from the Philippines, the world’s second largest producer of the metal used mostly to make stainless steel.
Delays to issuing quotas has slowed the rapid expansion of nickel production in the world’s top producer of the metal also used to make electric vehicle batteries.
The sources declined to say how much nickel production Tsingshan had cut and when. Tsingshan did not respond to Reuters‘ emails requesting comment on the cuts. Reuters could not reach the company by telephone.
Tsingshan produces nickel pig iron (NPI), among other nickel products, at Indonesia’s Morowali and Weda Bay industrial parks that the company controlled with other partners.
“August data from Indonesia … show slowing nickel pig iron (NPI) production at Morowali and Weda Bay,” said Jim Lennon, Managing Director for Commodities Strategy at Macquarie Group.
“This is due to ongoing ore shortages but also some furnaces were switched from nickel pig iron to matte to make metal earlier this year.”
Lennon forecast Indonesian nickel output this year to grow 15% annually to 2.2 million tons, a slight downward revision compared to Macquarie’s previous estimate of 2.25 million tons.
Indonesia had issued an annual nickel ore output quota of around 240 million metric tons per year for the next three years, its Energy and Mineral Resources Minister Arifin Tasrif said in June.
Tri Winarno, a senior official at Indonesia’s Energy and Mineral Resources Ministry, told Reuters that volumes approved for nickel ore under RKAB “are more than enough”.
A nickel smelter source said operating smelters was difficult given elevated ore prices and sliding ferro-nickel prices, but he added they were making profits and did not want to suspend, which will create the cost to restart furnaces.
Indonesia imported 3.37 million tons of nickel ore in the first seven months of 2024 from the Philippines compared with just 374,454 tons for all of 2023, official Indonesian data showed.
More than 55% of the ore imports from the Philippines so far this year were delivered to Weda port under the Weda Bay Industrial Park, and around a fifth went to Morowali.
Prices of Philippine ore containing 1.5% nickel have surged 30% since the start of the year to $52 a ton on Sept. 26, Custeel data on LSEG Workspace showed.
Meanwhile, prices of nickel pig iron containing 8-12% nickel have risen only 6.6% so far this year in China, data by Shanghai Metals Market showed.
(By Mai Nguyen, Siyi Liu, Fransiska Nangoy and Pratima Desai; Editing by David Evans)
Comments
Manish Parekh
Metal business are nownonly big direct business sp small traders users etc don’t get any work. In metal business one big company takes all so profit to one small area. Population increases and buyers sellers cuts agents etc. How to survive. Think for all.