Indonesia plans to boost its nickel production despite falling prices resulting from ample supply that are forcing some miners to shut down mines.
Per plans, battery-grade nickel production in Indonesia should increase fourfold by 2030, to 1 million tons, the Financial Times reported today, citing a senior government official from Jakarta.
Output of the sort of nickel used in stainless steel production is seen rising by 15% from the current 1.9 million tons annually, deputy coordinating minister for investment and mining Septian Hario Seto told the FT.
"We don't see any reason why we should not expand production of nickel for battery materials," the official told the publication. "What we want to achieve is price equilibrium. The responsibility for us as the biggest nickel producer is to supply enough nickel so that the EV [electric vehicle] transition can progress smoothly."
Indonesia is the world's largest nickel producer and, with Chinese financial help, a growing supplier of battery-grade nickel that the EV industry needs to scale production. However, with Indonesia's continued ramp-up of production, EV sales growth slowing and the outlook losing some of its brightness, nickel prices have declined substantially over the past 12 months.
This has forced some miners to shrink their operations, with Australian miners especially vulnerable, it appears. One mining company in Australia, Wyloo Metals, is already shutting down mines while industry heavyweight BHP is considering the shutdown of some of its nickel business, after taking a hit from a massive writeoff on these operations last year.
The CEO of French miner Eramet earlier this year warned that if Indonesia stays the course of nickel production ramp-up it would wipe out most of its competitors globally.
"It has really made a big part of the old traditional players structurally non-competitive for the future," Christel Bories told the FT in February. "This part of the industry will either disappear or be subsidised by governments."
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More