Posted on 07 Nov 2023
Indonesian nickel smelters have had to rely on Philippine imports to run operations in the world’s biggest nickel-producing country due to a crackdown on illegal mining.
The Financial Times reported on Monday that over 53,000 tonnes of nickel ore and concentrates were imported from the Philippines to Indonesia’s Morowali region in May and June. The region hosts Tsingshan’s nickel smelting complex.
“Those imports continued until at least September, including a shipment of 39,500t from the Philippines to Weda Bay, another large nickel smelting complex,” the report said, quoting unnamed sources and a customs document.
The increased purchases come as the Indonesian government increases scrutiny on the supposedly illegal mining on state reserves and a delay in issuing mining quotas. France’s Eramet recently cut its nickel ore production forecast for 2023 by 5 million tonnes citing a lack of quotas at its flagship Weda Bay mine, Kallanish notes.
“Risks to Indonesian nickel supply are growing due to ore grade depletion, regulatory scrutiny, mining quota issuance delays, rising pressure to address ESG concerns [and] the lower price environment,” US bank City says in a note.
The scenario could help ease the global surplus driven by Indonesia and lift nickel prices to $20,000/t, from the roughly $18,100/t currently, some suggest.
Last month, analysts at Fitch’s BMI cut its 2023 nickel price forecast due to weak market fundamentals, driven primarily by a deep oversupply and China’s slower-than-expected economic recovery. The research house expects nickel prices to average $22,000/t this year, down from its previous forecast of $23,500/t. It expects a global nickel surplus of 307,300t in 2023, up from 126,000t in 2022.
Source:Kallanish
