LX International to Expand Nickel Production at AKP Mine in Indonesia
LX International has announced plans to expand nickel production at the Adhi Kartiko Pratama (AKP) mine in Indonesia over the next three years. This decision comes in anticipation of increased demand for secondary batteries, despite a recent slump in the electric vehicle (EV) market.
The AKP mine is located near the Morowali Industrial Park in southeast Sulawesi, an area known for housing 90% of Indonesia's nickel reserves, the largest in the world. Nickel is a critical component in nickel-cobalt-manganese (NCM) batteries, which are essential for South Korea's battery industry. The mine's strategic location and the rising future demand for high-performance batteries underline the importance of this expansion.
Nickel prices have experienced significant fluctuations, dropping 36% over the past year to an average of $16,589 per ton in the first quarter of 2024 from $26,079 per ton in the same period the previous year. This decline was primarily due to oversupply and reduced EV demand. However, prices have since rebounded to $18,173 in April 2024 and continued rising to $19,800 as of Thursday. Despite these fluctuations, the AKP mine has remained profitable, and detailed first-quarter earnings will be released soon.
Currently, the AKP mine primarily produces ore with a 1.5% nickel content but has also sold low-grade ore with a 1.1% nickel content. The mining process involves removing organic soil and excavating high-nickel-content soil, with environmental restoration practices implemented once the stone content exceeds 30%. In 2023, drilling confirmed a minable ore amount of 36 million tons with a 1.6% nickel content.
LX International plans to conduct an additional 3,050 drillings over the next three years and will provide updates on minable reserves every two years. The company aims to increase production to 3.7 million tons by 2028 from 1.5 million tons in 2024, marking a 147% increase.
The AKP mine’s proximity to the sea and excellent port accessibility reduce transportation costs. Planned infrastructure improvements, including straightening roads within the mine, are expected to cut transportation costs from $4 per ton to $1 per ton, enhancing business viability and rental income.
