Indonesia Limits Nickel Ore Supplies to Support Local Miners Amid Market Slump
Indonesia is tightening supplies of nickel ore to protect smaller local miners as the global market for the battery metal faces a prolonged slump, according to French miner Eramet. The move has affected the world’s largest nickel mine, operated by Eramet in North Maluku province, after Indonesia allocated it a sales quota that was 29% lower than expected, leading to a significant drop in Eramet's share price in October.
The government restrictions were intended to protect smaller domestic miners from low nickel prices, but they have also led to a shift in production towards higher-grade ores used in stainless steel manufacturing. This shift has reduced the local availability of battery-grade nickel ore, forcing Indonesian smelters—key to the country’s electric vehicle (EV) ambitions—to rely on more costly imports.
“They wanted to maintain a good price for the ore on the market,” said Jerome Baudelet, CEO of Eramet Indonesia, on Thursday. “They wanted to protect the local small miners.”
Nickel, which is a crucial component in both stainless steel and EV batteries, has been experiencing a two-year slump due to weak demand and an oversupply largely driven by increased Indonesian production. This market situation has led some producers in other countries to halt operations entirely and has pressured smelters in Indonesia, who are already grappling with high ore prices due to supply shortages.
Following Indonesia's ban on nickel ore exports, the country has become responsible for over half of the world’s nickel output, thanks largely to a boom in smelter construction led by Chinese companies. The mining landscape in Indonesia is highly fragmented, with many small local firms alongside larger international players like Eramet and Vale.
