LME Approves First Indonesian Brand of Refined Nickel, Marking Industry Milestone
The London Metal Exchange (LME) has approved the listing of the first Indonesian brand of refined nickel, a significant milestone for the global industry. The brand, "DX-zwdx," represents Indonesia's growing influence in the nickel market. Five years ago, Indonesia produced 600,000 metric tons of nickel, mainly shipping unprocessed ore to China for stainless steel production. Last year, the country's output soared to 2.03 million tons, over half of the world's production. Indonesia now exports a range of nickel products, including refined metal of LME-grade purity. Indonesia's ban on ore exports from 2020 has driven this transformation, compelling miners to process ore domestically. Despite international pushback, including a World Trade Organization ruling against the policy, the ban remains in effect, supporting Indonesia's rise as a nickel powerhouse.
The new "DX-zwdx" brand, produced by PT CNGR Ding Xing New Energy—a joint venture between Chinese battery materials group CNGR Advanced Material Co. and a local company—achieves a purity of 99.8% nickel, with an annual production capacity of 50,000 tons. This development aligns with Indonesia's broader strategy to enhance its position in the battery materials value chain. Indonesia's trade with China reflects its evolving role in the nickel supply chain. While China previously imported Indonesian nickel ore, the 2020 ban shifted the trade towards intermediate products like nickel pig iron (NPI), ferronickel, and nickel matte. Imports of these products have surged, with China now also importing nickel sulphate and refined nickel from Indonesia.
For the LME, the inclusion of Indonesian refined nickel boosts liquidity, essential for rebuilding its nickel contract following the 2022 market crisis. This development comes at a critical time, as recent sanctions prohibit the LME from accepting nickel from Russia's Norilsk Nickel produced after April 12, 2024. Chinese nickel brands have increasingly filled this gap, contributing to a rise in LME nickel inventory, which reached a two-year high of 84,090 tons last week. Indonesia's nickel production continues to grow, with a 19% year-on-year increase in the first quarter of 2024. Incoming president Prabowo Subianto plans to maintain the country's strategy of leveraging its nickel resources to become a global electric vehicle hub. The administration has added new strategic projects, including five industrial parks for nickel processing, ensuring continued growth in Indonesian nickel production.
