JAKARTA – About a dozen newly constructed nickel smelters in Indonesia have stopped operations due to a plunge in nickel prices while others are operating at a loss, an industry association executive said on Monday.
Thirteen smelters with a combined capacity of 750 000 t/y of nickel pig iron "were forced to cease operation" because nickel prices reached as low as around $8 000/t, Jonatan Handojo, deputy chairman of the Indonesian Smelter Association told Reuters, declining to name the owners of the smelters.
Three-month nickel touched a one-year low of $8 680/t on the London Metal Exchange last week and is down more than 10% so far this year. The metal was trading at $8 975/t on Monday at 08:00 GMT.
There are 12 other nickel smelters in Indonesia which have been able to carry on producing, but they have suffered from losses, Handojo added.
Indonesia enacted a policy in 2014 restricting nickel ore exports that fostered the construction of new smelters. That year, nickel prices hit a record $21 625/t. The country reversed those rules earlier this year, allowing the export of nickel ore and bauxite under certain conditions.
Indonesian State-controlled miner Aneka Tambang resumed nickel ore exports last month.
Refined nickel prices have been pressured by expectations of more nickel ore supply from the Philippines and Indonesia.
Nickel ore output in the Philippines, the world's top supplier, fell 51% in the first quarter due to rains and the suspension of mine operations by former Environment Minister Regina Lopez.
But Lopez was ousted in May by a panel of lawmakers and President Rodrigo Duterte's choice for her replacement was one welcomed by miners. The country's Finance Minister Carlos Dominguez has promised investors there would be no more arbitrary suspensions of mining operations.