Eramet Considers Shanghai Metals Market as Benchmark for Nickel Market, CNBC Indonesia Reports

Jakarta, CNBC Indonesia – Eramet, the parent company of PT Weda Bay Nickel (WBN), one of the largest nickel mines in Indonesia, considers that the London Metal Exchange (LME) is no longer a benchmark for the nickel market and its prestige has lost to the Shanghai Metal Market.

This was quoted by Reuters, Thursday, (1/6/2023). Eramet Chairman and Chief Executive Christel Bories told Bloomberg News that the Index produced by the Shanghai Metals Market “has become the benchmark” for determining ferronickel prices.

“However, there is an increasing disconnect between market fundamentals and the products that are physically held in LME warehouses,” Bories said.

“The LME’s problem is setting the price of pure ore. While nickel is less and less used as a pure metal,” added Bories.

Eramet said LME is the second largest ferronickel producer in the world, which accounts for more than 10% of global production. output of nickel and is used to make stainless steel.

An Eramet spokesperson said that most of its nickel products are not indexed to LME prices. However, there is an exception for nickel ore in Indonesia which still follows the LME.

Eramet has historically produced nickel in the French Pacific region of New Caledonia. However, in recent years it has expanded production in Indonesia at its Weda Bay mine in partnership with Chinese steel giant Tsingshan.

The LME launched two consultations on Wednesday on possible reforms after last year’s crisis in nickel trading. The move followed up on an action plan set out in March.

The move is part of sweeping reforms to boost investor confidence after last year’s meltdown, when exchanges suspended trading and scrapped multi-billion dollar deals.

To note, a mining company from France, Eramet Group, together with a steel company from China, Tsingshan Holding Group Co. currently control a 90% stake in a nickel mine located in Indonesia’s Weda Bay.

Meanwhile, the remaining 10% is owned by Antam. Eramet’s official website notes, in the joint venture, Eramet owns 43% of the shares, while Tsingshan owns 57%.

(fsd/fsd)