Nickel Sector Faces Dynamic Changes Amid Indonesian Acquisitions and Global Market Shifts
Nickel Industries is strengthening its position as a major global nickel resource holder through strategic acquisitions in Indonesia. In August 2024, the company acquired the Sampala project and a 51% stake in the Siduarsi project, amid a severe nickel ore shortage in Indonesia. This shortage has driven a 45% increase in local nickel prices since late 2023.
Managing Director Justin Werner highlighted the importance of these acquisitions in addressing ore shortages and mitigating rising costs. The Sampala project holds 2.3 million metric tons of contained nickel and 200,000 metric tons of cobalt, with potential to expand to 10 million metric tons of nickel, placing it among the top five global nickel resources. Ore shipments are expected to begin by late 2025 to support operations at the Morowali Industrial Park.
The Siduarsi project, with an initial resource of 52 million dry metric tons at a nickel grade of 1.1%, also has significant growth potential. These acquisitions position Nickel Industries as a key player in the global market.
Globally, nickel prices have experienced volatility. The London Metal Exchange (LME) reported a decline in nickel prices to $15,873 per metric ton at the end of October 2024, following an earlier surge to $18,153 per ton. The drop was mainly due to lackluster investor enthusiasm after China’s stimulus measures, which did not meet expectations for aggressive economic support.
As the largest consumer of industrial metals, China plays a crucial role in driving nickel prices. Despite an initial boost in investor confidence following China’s stimulus, weak manufacturing data caused prices to retreat. Meanwhile, stocks of Russian-origin nickel in LME warehouses rose by 19.6% month-over-month, contributing further pressure to prices.
Indonesia continues to play a pivotal role in the nickel market. The government plans to regulate nickel ore production to maintain a balance between supply and demand, especially given the challenges related to the new domestic mining approval system. Despite tight supply, Indonesia's primary nickel output increased by 14.5% in the first eight months of 2024. Additionally, the country is seeking to reduce China-based ownership of projects to qualify for incentives under the U.S. Inflation Reduction Act.
S&P Global analysts have revised their LME nickel price forecast for the December quarter to $16,583 per ton, considering recent price fluctuations and a possible economic recovery in China. Projections suggest a surplus in primary nickel output, with growth expected at nearly 6% annually over the next four years. However, evolving Indonesian policies could impact this outlook.
