Indonesia's Nickel Industry Embraces New Pricing Formula to Boost EV Battery Production

In Indonesia, a group representing nickel smelters has supported a new benchmark pricing strategy aimed at lowering the costs of lower-grade nickel ore, crucial for manufacturing electric vehicle batteries. Announced by the Energy Ministry to take effect from September 15, this adjustment decreases the corrective factor for pricing calculations from 26% to 14% for ores with a nickel content of 1.2%. It similarly reduces the factor for other minerals like cobalt within the ore from 30% to 17%.

Consequently, this leads to lower ore prices, thus reducing the associated taxes and royalties for this type of ore, commonly known as limonite and often used in the high-pressure acid leach (HPAL) process essential for producing battery materials. Arief Perdanakusumah, chair of the FINI industry group, expressed in a recent statement that the revised, more reasonable pricing structure for limonite now better protects the HPAL sector from potential operational losses and cash flow issues.

Arief pointed out that the previous pricing formula had inadvertently escalated feedstock costs, especially during a time when operators were already grappling with the impact of heightened sulfur prices due to conflicts in the Middle East.

Meanwhile, the Nickel Miners Association, APNI, in a comprehensive statement, emphasized the need for careful monitoring of the revised pricing formula’s effects on actual prices, trade volumes, and government revenues.

APNI further expressed that a pricing model more attuned to the economic realities of limonite could expand the exploitation of low-grade ore reserves, enhance consumption by HPAL facilities, and foster the utilization of resources that were once considered economically unviable.