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South Pacific ban sends nickel prices soaring to historical high

Pt. Huadi Nickel-Alloy Indonesia
Pt. Huadi Nickel-Alloy Indonesia

A South East Asian nation is introducing a complete ban on exporting raw nickel, sending commodity prices to a new high on September 4.

The London Metal Exchange advertised nickel was trading at US$17,900 (A$26,282.99) a tonne, representing a five year high. Just a month earlier it was only trading at US$14,855 (A$21,811.56) a tonne, representing a 17.1 per cent increase.

Prohibition starts in January

From 1 January 2020 Indonesia will enforce a complete ban on raw nickel ore exports. The move came two years earlier than markets anticipated since the country intends to reserve supplies for dozens of smelters currently being built, officials said according to Bloomberg News.

Indonesian Energy and Mineral Resources Ministry director general for mineral and coal Bambang Gatot Ariyono confirmed the prohibition is also part of Jakarta’s plan to retain low-grade nickel ore for cobalt and lithium to be used in electric batteries.

“The government decided after weighing all the pros and cons that we want to expedite smelter building,” Ariyono told a press conference. “So we took the initiative to stop exports of nickel ores of all quality.”

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Nickel producers with existing permits will be permitted to export nickel ore until the end of the year.

New projects need further price hike

Consultancy Roskill revealed the base price for nickel would need to rise a further 22.9 per cent to at least US$22,000 a tonne before lithium projects would be profitable enough to trigger new developments that often take five or more years to develop.

“You need a much higher purity nickel for batteries. To build more capacity you need significantly higher prices,” Roskill analyst Jack Anderson told Reuters. “Nickel has been dominated by the stainless steel industry, which uses the lowest-cost, low-grade material coming from Indonesia and the Philippines.”