The Ministry of Energy and Mineral Resources (ESDM) plans to suspend or limit construction permits for Class II nickel processing plants. Irwandy Arif, special Staff member of the Ministry of Energy and Mineral Resources for Accelerated Mining and Coal Governance, said the implementation of the plan takes into account the supply and demand of nickel ore. He said there was a need to balance the supply and demand of nickel ore so that Indonesia would not become an importer of the metal. The purpose of this suspension is to enable the completed smelter to still have access to nickel ore supplies in order to achieve sustainable production operations.
"The Ministry of Energy and Mineral Resources has planned to impose restrictions. The Coordinating Ministry of Maritime and Fisheries has also said that the government will no longer issue permits for the construction of Category II nickel pyrotechnics smelters." Irwandi said last Friday. Irwandi explained that the government will conduct a comprehensive review of this policy, especially for nickel processes in Indonesia, including low grade nickel and high grade nickel (ore). "Currently, 44 nickel smelters are producing stainless steel using the pyrometallurgical process, while three smelters are producing batteries using the hydrometallurgical process. The annual consumption of sapropelic ore and limestone ore for the production of nickel products by pyrometallurgy is 210 million tons/year and 23.5 million tons/year, respectively." Irwandy explains.
There are currently 25 nickel smelters under construction, requiring 75 million tons of nickel feedstock per year. At the same time, six hydrometallurgical battery process smelters are under construction, requiring 34 million tons of nickel raw materials per year. In the planning stage of thermal smelting, there are 28 smelters and 10 wet smelters, each requiring 130 million tons/year and 54 million tons/year.
"There are a total of 116 existing smelters (excluding new ones), including 97 thermal smelters and 19 wet smelters," Mr Irwandi said.
Arif S Tiammar, the advisory board of the Assetindo Association, supported the measure taken by the Ministry of Energy and Mineral Resources, which will oversee the construction of a Category II nickel smelter, saying it was a good policy to limit overproduction.
"To be honest, I myself am very much in favor of restricting the development of ferro nickel or the development of projects based on metallurgical iron that convert nickel sulfide ore into FeNi (water quenchable nickel) or NPI (nickel pig iron) or nickel matte. Even though we have very large nickel reserves in hydrometallurgy, "says Arif S Tiammar.
Arif S Tiammar revealed several reasons for agreeing to the moratorium. Taking the lead in limiting excess capacity, Indonesia has become the world's largest producer of nickel pig iron. Even with the data that the annual output of 9 million tons of NPI (nickel pig iron) in 2022 needs to consume 1.1 million tons of nickel raw materials to meet, the current capacity is already very huge. Finally, Indonesia became the world's largest producer of nickel pig iron. This production restriction is the first reason why I agree with the suspension or restriction, "said Arif S Tiammar.
The second reason is the elasticity of the reserves held, and the third is the impact of supply and demand on the world market price of nickel pig iron. "I myself am the perpetrator. The current price of NPI, or FeNi itself, is very low compared to the next two years because of the overproduction of existing NPI, causing the price of NPI to fall. That is why we strongly agree to work for this moratorium, "concluded Arif S Tiammar.
