Indonesian nickel smelters group says new price formula provides operational certainty

JAKARTA, Sept 17 : A group representing Indonesian nickel smelters welcomed a new benchmark price formula that will reduce the price of low-grade nickel ore, which is used in the manufacturing of EV batteries, saying it would provide operational certainty.

The Energy Ministry lowered its "corrective factor" used in its ore-pricing calculation to 14 per cent from 26 per cent for low-grade ore with 1.2 per cent nickel content, and also lowered it for other mineral content in the low-grade nickel ore, such as cobalt, to 17 per cent from 30 per cent, effective from September 15.

The new formula will lead to lower ore prices as well as lower taxes and royalties for low-grade nickel ore, known as limonite, which is often used in the high-pressure acid leach (HPAL) process in the production of materials for EV batteries.

"With a more rational and affordable limonite pricing structure, the HPAL industry is now better protected against the risk of operational losses and cash flow deficits," Arief Perdanakusumah, chairman of the FINI industry group, said in a statement issued late on Wednesday.

Arief said the previous price formula had raised feedstock prices at a time when operators were facing higher sulphur prices due to the war in the Middle East. 

Separately, nickel miners association APNI said there should be monitoring of the impact of the change on realised prices, traded volumes and state revenue.

“A formula better aligned with the economics of limonite could expand the utilisation of low-grade ore reserves, increase limonite uptake by HPAL facilities, and drive the utilisation of resources that were previously economically marginal,” APNI said.