Amid nickel glut, Indonesia’s next president vows to keep ‘downstreaming’ policy

Reuters | March 13, 2024 |

Prabowo Subianto (Image: X)

Indonesia’s incoming president, Prabowo Subianto, has pledged to continue predecessor Joko Widodo’s nickel “downstreaming” policy but faces the task of reducing oversupply while pushing to strengthen the processing industry, his advisers say.


Prabowo, said by independent pollsters to have won the Feb. 14 election, has said he will pursue the effort to extract more value from Indonesia’s vast resource wealth by halting exports of key raw materials and developing domestic processing instead.

The policy drew investments of billions of dollars from smelting firms, most of them Chinese, and boosted Indonesia’s exports.

But it led to an oversupply of processed nickel that caused a drop of 45% in prices last year, squeezing producers in Australia and elsewhere, although they have since recovered to stand up about 12% in 2024.

Experts advising Prabowo are discussing ways to stem a further decline in prices while still generating more jobs and boosting value-addition, members of his campaign team said.

“We must control supply so prices can be underpinned,” Erwin Aksa, a campaign vice-chair, told Reuters, adding that current conditions are likely to drive investors to avoid new projects.

“If there is too much oversupply and those smelters stop their operations, that would impact the whole supply chain,” he added.

Prabowo himself has not publicly detailed his nickel strategy, but told a Feb. 6 rally, “We are determined to guard Indonesia’s wealth. We want to manage and control this wealth, so the value-add can be enjoyed by all Indonesian people.”

Indonesia produced about 1.4 million tons of primary nickel last year, or about 40% of global output, data from the International Nickel Study Group showed.

“Indonesia is flooding the nickel market with low-cost supply, and we don’t think it’s going to stop anytime soon,” said S&P Global Ratings, which predicts the country will add 300,000 metric tons of smelting capacity this year.

S&P Market Intelligence expects the oversupply to continue beyond 2025, as Indonesia has excess capacity for an intermediate product, nickel pig iron (NPI).
Taking stock?

Some of Prabowo’s advisers have called for a moratorium on new smelters, allowing time to take stock of reserves and improve governance.

Last year, a miners’ association warned that reserves of high-grade nickel ore could be depleted in about six years. Recently, a government official said overall nickel ore reserves were sufficient for 30 years.

No decision has been made on a possible moratorium, however, said Eddy Soeparno, another vice-chair of Prabowo’s campaign team, while adding, “It is good to take a pause and give the policy an overview.”

Prabowo will push for further processing of NPI, helping to ease oversupply, said another campaign official, Anggawira, who goes by one name.

The main challenge was building domestic industries to consume the nickel, he said.

“When the nickel is cheaper, that would make our industries more efficient,” added Anggawira, who also chairs the Association of Indonesian Energy, Mineral, and Coal Suppliers.

(By Fransiska Nangoy; Editing by Tony Munroe and Clarence Fernandez)

Wyloo says industry will turn from LME without green nickel

Reuters | March 13, 2024 

Wyloo owner Andrew Forrest. Credit: World Economic Forum

Nickel miner Wyloo, owned by Australian mining magnate Andrew Forrest, said that if the London Metal Exchange (LME) doesn’t launch a green nickel contract, the industry will have to look for another trading venue.


Forrest had told Australian media last month that the LME should classify its contracts into clean and dirty to give customers more choice. Wyloo is set in May to shutter two nickel mines in Australia that it bought last year for $504 million.

The LME said that low carbon nickel, which it classifies as producing 20 tonnes of carbon dioxide or less per tonne of nickel, could already be traded on its partner MetalsHub’s system.

“Wyloo has been contacted by several parties seeking to develop a green nickel premium, so there is clearly demand for greater transparency and differentiation between clean and dirty nickel,” Wyloo CEO Luca Giacovazzi told Reuters.

“As the world’s largest metals exchange, the LME should be leading in this area,” he said.

“If the LME is to continue to set the standard for ethical metal supply practices, it cannot afford to take no action, or the industry will look for an alternative marketplace.”

Calls for a nickel price that reflects strong environmental and governance standards have grown from high-cost producers such as Australia, where low prices have forced miners to shutter operations due to a flood of Indonesian supply, most of which is produced using coal.

(By Melanie Burton; Editing by Michael Perry)