The Energy and Mineral Resources Ministry has encouraged the Industry Ministry to evaluate the development of nickel refinery and proccesing facility, particularly the smelter, with Rotary Kiln Electric Furnace (RKEF) that produce Nickel Pig Iron (NPI).
Energy and Mineral Resource Minister Arifin Tasrif said the evaluation is needed because there is oversuplly of Nickle Pig Iron in the global market. As a result
of this oversupply, nickle price has dropped significantly in the global market.
“This is a problem of two sectors, the first one is integrated industry and the other one is non-integrated industry.. Both must be connected because the upstream sector is handled by the Energy and Mineral Resources Ministry, the mining industry is the domain of Industry Ministry. The Industry Ministry can evaluate which one that can be encouraged and which one that must be considered in order to prevent oversupply,” Arifin Tasrif said on Friday, February 16, 2024.
If the construction of RKEF smelter that produce nickel pig iron is still in progress, Arifin said, the ministry will request them to halt their construction temporarily. If the smelter has not been operating, they can review again the smelter. Meanwhile, if an investor just submit their proposal for the construction of RKEF smelter,the ministry will reject the proposal.
“They should enter into derivative products that produce more than just nickel pig iron, namely into a segment of products whose market are growing, because the price of raw material is not good” Arifin said.
In order to achieve that, the Energy and Mineral Resources Ministry encourages the industry to process the nickel further downstream, for example into nickel matte, that can be used as component of EV’s battery. “We will evaluate new licenses,” he explained.
Previously, Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan said that commodity price trends must be seen in the long term, at least 5-10 years back.
“At the end , we need to look for the equilibrium. You can’t look at any commodity from a short period of one or two years, it must be 5-10 years. You have to look at the cumulative price. Then, look at the average price,” Luhut said earlier this month.
Deputy for Investment and Mining Coordination at the Coordinating Ministry for Maritime Affairs and Investment, Septian Hario Seto, also said that the current nickel price at US$ 16,000 is still higher than the average price of the last 10 years which was at the level of US$ 15,000.
“Keep in mind that the current nickel price of US$ 16 thousand is still higher than the its average price in the last 10 years which was at the level of US$ 15 thousand, even still higher than the initial period we did downstreaming in 2014-2019 where the average price of nickel was at US$ 12 thousand,” he explained.
Based on Trading Economics data, the price of nickel as of Thursday, February 15, 2024 was recorded at US$ 16,007 per ton. On a weekly basis, nickel prices edged up 1.61 percenrt and on a monthly basis 0.66 percent. However, when compared to the same period last year (year on year), nickel prices fell 39.06 percen.
It has been reported that the world nickel prices fell to nearly the lowest position in the last three years. This price drop is considered due to the flood of nickel supply from Indonesia.
Referring to CNBC Indonesia Research notes, on Monday, January 22, 2024, the world nickel price for a three-month contract was recorded at US$ 16,036 per ton. This position is the lowest since April 2021.
The main driver of nickel’s poor performance is the condition of higher supply compared to demand. The International Nickel Study Group (INSG) expects nickel prices to remain under pressure in the short term in line with the increasing surplus in the global market and the global economic slowdown.
The average global nickel price according to INSG was US$16,600 per ton in the first quarter with prices gradually rising to an average of US$16,813 per ton by 2024.
