Indonesia nickel smelter group says new ore pricing formula would hurt industry

Indonesia’s nickel smelters group, FINI, said on Wednesday that a new formula to calculate nickel ore price will pile more pressure on the sector, which is already struggling to cope with rising production costs.

A new nickel ore pricing formula, which factors in the content of other minerals in the ore, took effect on Wednesday.

The new formula will “significantly” increase production costs for the production of nickel products for both metals and battery components, FINI said in a statement.

FINI estimated that production costs of mixed hydro precipitate, used in battery production, would increase by around $2,400-$2,600 per metric ton of nickel content due to the inclusion of cobalt content in the pricing formula.

Nickel processing costs using rotary kiln-electric furnace (RKEF) would increase by close to $600 per ton of nickel content, it said.

Nickel smelters are already facing higher production costs due to rising energy and sulphur prices, FINI said.

“The nickel processing and refining industry will potentially incur operational losses, especially when other components, particularly industrial fuels and sulphur raw materials, are also significantly increased,” FINI said.

(By Bernadette Christina Munthe and Fransiska Nangoy; Editing by David Stanway)