luc, CNBC Indonesia
Wednesday, 30/08/2023 21:00 WIB
Photo: Obi Island Nickel Mine, North Maluku. (CNBC Indonesia/Suhendra)
Jakarta, CNBC Indonesia – The lack of local nickel ore supply for smelters in Indonesia has become the world’s spotlight. In the midst of the downstream program being intensified by the government, smelter companies are importing raw materials from the Philippines.
This is feared to disrupt the flow of trade in raw materials and increase costs throughout the supply chain.
Reuters reports that the government recently delayed issuing mining quotas and stopped operations at a key site owned by state mining company PT Antam Tbk. (ANTM) after conducting an investigation into corrupt practices in granting mining permits.
Despite mining in other locations continuing and Indonesia, which accounts for half of global ore supply, maintains that it has no shortage of ore, prices have increased by around 8% this week, following a 10% jump the previous week.
Several companies are now buying ore from the neighboring Philippines, which is the world’s second largest supplier, if new mining quotas are further delayed. This was disclosed by three smelter managers, two nickel traders and a Chinese analyst.
All declined to be identified because they are not permitted to disclose trading information publicly.
“(We) will start importing starting this month. It’s economical,” said an official at a large smelter in Indonesia.
The person did not specify how much the smelter purchased, but said the purchase was low quality limonite ore.
Indonesian miners will prioritize high grade ore due to limited production quotas.
According to Indonesian trade data, Indonesia imported 53,864 metric tons of nickel ore in the first half of 2023, up from 22,503 tons in 2022. However, imports from the Philippines only started in May, and all arrived at Morowali port.
“Ore from the Philippines is generally lower grade than Indonesian material so that will drive operational costs higher due to lower production of the same ore tonnage,” said Wood Mackenzie analyst Andrew Mitchell.
“But the ore is cheaper compared to domestic ore at the moment so this will offset some of the increased costs,” he added.
Meanwhile, Indonesia exported most of its ore before the 2020 ban halted all shipments and attracted billions of dollars worth of investment in smelter construction, mostly from Chinese companies.
According to Chinese consultancy Mysteel, imports from the Philippines could increase by up to 100,000 tonnes for July and August combined due to limited supply.
The Philippines will mine 360,000 tonnes of nickel ore by 2022, or 11% of global supply.
Rising demand for ore from the Philippines is also pushing up prices in China, as buyers stockpile due to limited supplies from Indonesia and ahead of the rainy season in the Philippines that starts in October.
The price of Philippine ore with 1.3% grade that landed at China’s Lianyun port jumped 20.6% in the past month to US$ 41 per tonne, the highest since March.
Watch the video below:
Nickel Factory Moratorium in Front of Eyes, This Says Entrepreneurs
(luc/luc)
2023-08-30 14:00:00
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