ASX-listed Nickel Industries has advised of an interruption to the ramp-up of its Excelsior nickel/cobalt high pressure acid leaching project, in Indonesia, owing to dry conditions that have constrained water supply to the operation.

Nickel Industries plans to have Excelsior produce mixed hydroxide precipitate, which is an intermediate nickel and cobalt product, nickel and cobalt sulphate, and nickel cathode.

By way of comparison, rainfall at the nearby Hengjaya mine has historically averaged 222 mm in August, whereas less than 4 mm was recorded in August this year.

Prior to the onset of the dry conditions, Excelsior had ramped up to about 50% of nameplate capacity within four weeks of the start of commissioning.

Should the water supply constraints persist, the project is expected to operate at about 30% of nameplate capacity until water availability normalises. Rainfall is inherently difficult to predict; however, the company’s base case is that water supply will normalise with the onset of the wet season by December. 

The company’s rotary kiln-electric furnace operations, meanwhile, have not been affected by the dry conditions and continue to operate normally. This operation processes ore from the Hengjaya mine into metal products.

BUSINESS LICENCE

Nickel Industries confirms that Excelsior has received an exemption from the regulation introduced earlier this year restricting the export of mixed hydroxide precipitate, opening the path to the issuance of an Izin Usaha Industri (IUI) for all of Excelsior’s products.

The IUI is the industrial business licence that allows commercial sales to be undertaken. The next step for all products is the online submission of comprehensive documentation through the Indonesian government’s online submission portal. Following review, a site inspection is typically conducted before the IUI is granted.

The company expects the IUI to be received in October, which will permit commercial sales of Excelsior’s full product suite, including nickel and cobalt in cathode and sulphate.

STRONG PERFORMANCE

Nickel Industries reports the Hengjaya mine continued its strong performance, with record monthly nickel ore sales of 1.6-million wet metric tonnes in August, following 1.4-million wet metric tonnes having been produced in July. The July and August volumes generated $90-million in adjusted earnings before interest, taxes, depreciation and amortisation.

The company says the same dry conditions that have constrained the Excelsior project have, conversely, supported mining and haulage productivity at the Hengjaya mne. Year-to-date ore sales to August 31 total 9-million wet metric tonnes, with the company on track to fully utilise its current 2026 Work Plan and Budget sales quota of 14.3-million wet metric tonnes.

Given the strength of production and ore sales, the company has lodged an application to increase its 2026 RKAB quota and expects a response shortly. The initial RKAB was tightly set around 260-million to 270-million wet metric tonnes to support global commodity prices and manage domestic supply, however, Indonesia's Ministry of Energy and Mineral Resources has been evaluating revisions and weighing potential increases to the RKAB of between 300-million and 360-million tonnes.