Major Indonesian nickel smelter enters court-ordered debt halt

One of Indonesia’s largest nickel smelters has been placed under a temporary debt suspension by a local court, as the Southeast Asian nation’s industry grapples with ore shortages and low metal prices.

PT Gunbuster Nickel Industry has been put under a so-called PKPU by the Central Jakarta Commercial Court, according to the court’s website. That’s the initial stage of the restructuring process, and gives a debtor temporary protection from creditors as a workout or settlement is negotiated.

Indonesia is the world’s largest nickel producer following a breakneck expansion driven largely by Chinese capital and expertise, and the country accounts for more than 60% of global supply. Still, producers have been struggling amid a slump refined metal prices, as well as shortages of ore.

The smelter was inaugurated in 2021 by then-President Joko Widodo, and became a symbol of the rapid rise of the nation’s nickel sector, as well as its challenges, including overcapacity, industrial accidents and deaths. Able to produce more than 1.8 million tons a year of nickel pig iron, its one of the country’s biggest individual plants.

Gunbuster may have been impacted by the restructuring of an affiliate company, China’s Jiangsu Delong Nickel Industry Co. Efforts by Bloomberg News to contact the companies did not get an immediate reply.

The application to place Gunbuster under the temporary debt suspension was made by PT Pancaran Karya Shipping and PT Pancaran Maritim Transportindo, according to the website.

(By Eddie Spence)