Nickel Ore Supply Security Becomes a Top Priority Amidst Global Demand Fluctuations

Nickel

As the global demand for nickel continues to rise, primarily driven by its critical role in the electric vehicle (EV) sector, securing a steady supply of nickel ore has emerged as a primary focus for smelters and investors. This shift in priority follows a period of tight spot availability due to delayed approvals of Indonesian nickel mining work plans (RKABs), highlighting the challenges and strategic shifts in the nickel supply chain.

Navigating Supply Challenges

The delays in RKAB approvals in Indonesia, the world's top nickel ore supplier, have significantly impacted ore availability, particularly during the monsoon season from May to August. These challenges were exacerbated by slow approval rates and uneven distribution of RKABs among companies and regions. As a result, some smelters were forced to reduce production, while others sought alternative sources, leading to a dramatic increase in nickel ore imports. Notably, imports to Indonesia were 55 times higher in the January-October period compared to the previous year, with the Philippines providing the majority of these imports.

Strategic Adjustments and Future Outlook

To counter these supply uncertainties, smelters are increasingly focusing on securing long-term ore supplies. This strategy is evident in the growing number of collaborations between Chinese investors and mining companies. For instance, Green Eco-Manufacture (GEM) has partnered with Indonesian nickel firm Merdeka Battery Material and also has a joint high-pressure acid leaching (HPAL) project with PT Vale Indonesia, a subsidiary of the Brazilian mining giant Vale. These partnerships are aimed at ensuring a reliable supply of ore for nickel production, crucial for the booming EV market.

Indonesia has approved significant quotas of wet metric tonnes (wmt) for the coming years to meet this demand. However, the unpredictability of RKAB approval timelines and the potential disruptions from new regulatory measures, such as the Simbara system aimed at increasing transparency and curbing illegal mining, could pose ongoing challenges.