Indonesia controls nickel ore supply to balance weak demand
Indonesia is managing the amount of nickel ore its miners produce in order to balance supply and demand, a government minister said.
“We need to maintain supply and demand balance,” Bahlil Lahadalia, minister for energy and mineral resources, said at a media briefing in Jakarta on Friday. “If demand is low and supply is abundant, prices will fall.”
Nickel smelters in the country responsible for more than half of world production are enduring a shortage of ore due to government licensing issues, driving up the premium that must be paid to secure the raw material. That’s forced many to import record quantities from the neighboring Philippines.
Still, benchmark nickel prices on the London Metal Exchange have struggled to recover substantially from multi-year lows earlier in 2024 due to weak demand for stainless steel, the biggest market for the metal. Bulls are hoping that fresh economic stimulus from China can boost consumption.
The issues with the Indonesian permits, known as RKABs, have persisted since the start of the year. French firm Eramet SA, which operates one of Indonesia’s biggest nickel mines, cut its guidance for external ore sales by 29% after the government declined to license a higher amount.
On Friday, Lahadalia said that if large foreign-owned miners were granted their full sales quotas, smaller miners would struggle to sell their product.
“Most of the big ones are foreign owned, if we give them full RKAB, where can the others sell their ore?” he said. “Smelters must also buy ore from other companies that have no processing plants, like small miners.”
