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Sulphur 414 Sep-Oct 2024

30 September 2024

Full speed ahead for Indonesian nickel

Editorial

Full speed ahead for Indonesian nickel

“The effect has been equally dramatic on the sulphur and sulphuric acid industries…”

One of the biggest areas for new sulphuric acid demand in the past few years has been in nickel processing plants, particularly in Indonesia. A decade ago, incoming president Joko Widodo took a strategic decision that the country needed to try and capture more of the value chain from its mining and mineral industry, which was focused at the time on exports of aluminium, copper and nickel ores and concentrates, mainly to China. Over the past 10 years, the export of raw ores has been progressively restricted and companies instead compelled to build downstream processing plants for the metals. With China the main recipient of Indonesian ores, much of the investment in metals processing in Indonesia has been via Chinese companies.

The results are now beginning to bear fruit, with the completion of projects like PT Freeport’s major new copper smelter at Gresik (see Sulphuric Acid News, this issue). On the nickel side, several major plants for recovery of nickel using high pressure acid leaching (HPAL) have now been completed, and Indonesian refined nickel output is rising sharply. Recent figures show that by Q2 2024 global nickel supply rose by 8% year on year, with Indonesia the main driver of this. Indonesian nickel output rose 11% in the past year.

The effect has been equally dramatic on the sulphur and sulphuric acid industries, as acid demand for HPAL is considerable. While this initially drove an increase in sulphuric acid imports to Indonesia, rising sulphur burning acid capacity in Indonesia is now leading to a switch away from acid imports to sulphur imports. Indonesia’s imports of sulphuric acid for July declined to 64,000 tonnes, down 64% year on year, while sulphur imports were 425,000 tonnes for the month, up more than 400% from the same period in 2023. Indonesian sulphur imports in the first seven months of the year increased 39% to 1.92 million t/a, up from 1.38 million t/a in the same period a year earlier. Global sulphur consumption for nickel production has climbed from 1.7 million t/a in 2020 to 3.5 million t/a in 2023, with most of the increase coming from Indonesia. Meanwhile Indonesian acid imports are likely to fall later this year, with increased domestic production expected from smelters such as the new Gresik copper smelter.

At the moment, there seems no sign of this stopping, in spite of a slowdown in the Chinese economy and a fall in world nickel prices. Indonesia’s nickel capacity is fairly low on the cost curve, at around $14-16,000/t. While nickel prices have dropped from highs of $30,000/t in 2023 to $15,700/t at time of writing, this is below the cost of production for a lot of global nickel capacity, which has been struggling. Outside of China and Indonesia, nickel output has actually been falling, dropping 9% year on year to 219,000 t/a in Q2 2024, and 37% down on the level of 2015. Ferronickel capacity has been closing, such as at Koniambo in New Caledonia, and some HPAL capacity is also struggling. Sumitomo’s Ambatovy project in Madagascar has been running at low operating rates due to technical issues and has recently filed a debt restructuring plan.

Meanwhile, the cost-advantaged position of Indonesian nickel projects, along with the longer-term strategic objectives of Chinese owners to secure the nickel units, is expected to mean that project activity will continue. Tsingshan is in the process of commissioning another 50,000 t/a of nickel cathode capacity. Global sulphur demand for nickel processing is expected to rise to 6.7 million t/a in 2028, with much of the increase continuing to come from the ramp up of new HPAL capacity in Indonesia.

Richard Hands, Editor

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