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Indonesia’s nickel sector: Striking a balance between global demand and sustainability

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“We’ve received significant interest,” Werner informed Reuters. “We’re not under pressure to decide hastily.”

Indonesia has risen as a dominant force in the supply chain, boasting low production costs and accounting for over half of the world’s nickel output. It’s projected to contribute nearly three-quarters of the global supply by the end of this decade.

Nickel Industries’ High-Pressure Acid Leach (HPAL) plant will yield nickel cathodes, mixed hydroxide precipitate (MHP), and nickel sulfate, essential components for electric vehicle batteries.

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The company is seeking investors for up to a 25% stake in the plant, as its Chinese partner Tsingshan, the plant’s builder, is willing to divest part of its 45% ownership.

A surplus drove nickel prices down by 45% last year, putting pressure on high-cost producers such as BHP and others in Australia. They advocate for a “green premium” for low-carbon nickel. The London Metal Exchange (LME) defines 20 tonnes of carbon dioxide (CO2) per tonne of nickel as the benchmark for low-carbon nickel. Nickel Industries’ HPAL plant will produce one tonne of nickel for approximately eight tonnes of CO2.

“We’re hopeful for a green premium and we’re confident we’d meet the criteria,” Werner stated. However, he noted that car manufacturers and battery producers are resistant to paying such a premium. “They’re looking for discounts,” he added.

Australian mining tycoon Andrew Forrest proposed last month that the LME categorize its contracts into “clean” and “dirty” to offer consumers more options. His company, Wyloo, plans to close nickel mines it acquired for $504 million last year.

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