INTERVIEW: Ramp-up of Nickel Industries’ new HPAL plant supported by sulfur stocks

Nickel Industries, a producer of nickel with mining and downstream operations in Indonesia, stocked up on sulfur for its Excelsior Nickel Cobalt High-Pressure Acid Leaching (ENC HPAL) project before sulfur prices peaked, and is looking to produce 20,000 mt of nickel in mixed hydroxide precipitate (MHP) at the new plant, managing director Justin Werner told Platts, part of S&P Global Energy, in an interview.

Nickel Industries normally imports sulfur for the HPAL process from the Middle East, including from Iran. Due to the military conflict in the region, the company is now sourcing sulfur for its sulfuric acid requirements in North America.

The supply disruption has pushed sulfur prices from $250/mt previously to over $1,000/mt, but Nickel Industries managed to stock up on sulfur for the ENC HPAL plant at an average price of $450/mt and has enough stocks until the end of September, although it has still added some cost pressures, according to Werner.

"On the other side, we're seeing that the payability for MHP relative to the LME nickel price has also increased significantly, providing a bit of cushion against more expensive sulfur," he said.

Whether a lasting peace deal can be struck in the Middle East, and how quickly the sulfur price will go back down, remain the two unknowns, but Nickel Industries is moving ahead with commissioning the ENC plant, in which it holds 46% stake, and expects it to produce the first MHP in July, and to shortly be supplying SpaceX.

Initially, the company considered increasing its stake in ENC to 55%, but in the end, it brought in an investor -- South Korean component supplier Spear -- which acquired a 10% stake instead.

"They are one of only five accredited suppliers to SpaceX, and we're the only one with a long-term 10-year [offtake] contract with Spear," said Werner. "We see that as a very strong validation of the project and the quality. That means that nickel from ENC will be going into SpaceX rockets in the very near future."

With the start-up of the ENC HPAL circuit, Nickel Industries will also begin producing nickel cathode and nickel and cobalt sulfate. There is no separate guidance for their volumes, but they are likely to be minor compared to MHP.

Production plans

This year, Nickel Industries is looking to produce, proportional to its equity stake, 20,000 mt of nickel in MHP from the new plant and an additional 8,000 mt from the Huayue Nickel Cobalt HPAL facility, corresponding to its 10% stake.

ENC should hit its nameplate capacity of 72,000 mt/year by October, but HPALs in general tend to outperform, according to Werner. "If you look at Huayue, the plant was designed to produce 60,000 mt/year, and it has been operating at 80,000 mt/year, so 40% above the nameplate capacity," he said.

On June 24, Nickel Industries announced investments in two additional HPAL projects. One is $169 million for a 17.5% interest in Teluk Metal Industry, with a projected capacity of 38,640 mt/year of nickel in MHP and a capex guarantee of $965 million. That stake will give Nickel Industries 6,775 mt/year.

The second investment is through a share swap, with the company exchanging 18% of its shares in its Sampala mine for 36% of the Chengsheng New Energy HPAL project. The latter, backed by $671 million in funding, is designed to produce 28,357 mt/year, with Nickel Industries' share equating to 10,208 mt/year.

"We're effectively getting 17,000 mt of nickel and paying only $169 million for it," said Werner.

Sampala mine

Both projects should reach nameplate capacity around September 2027. Just before that, at the end of the first half of 2027, Nickel Industries should see first production at Sampala -- its second captive mine after Hengjaya, according to Werner.

At the moment, the company has an approved RKAB -- a mine production permit in Indonesia -- for 14.3 million mt of ore this year. This is below the 25 million mt it had hoped to secure, but still significantly higher than its circa 10 million mt extraction in 2025.

Also, in July 2026, Nickel Industries will be applying for a revision of its mining quota, asking for it to be increased to 19 million-20 million mt, said Werner. He explained that the Indonesian government gives out quotas at the beginning of every year, and in the middle, applicants can apply for their revision.

"Other producers got cut significantly. We get [comparably] larger volumes of ore allocated because we have invested in HPAL and nickel pig iron," he said.

For the same reason, he is confident a permit for the Sampala mine will be a solid one. "The government has demonstrated that mines integrated with downstream processing appear to receive more favorable treatment, and Sampala will supply 100% of its ore to Teluk and Chengsheng HPAL operations," said Werner.

Price for better margins

As the producer of around two-thirds of the world's nickel, Indonesia, with its quota system, has a major influence on nickel prices.

"In 2025, 350 million mt to 370 million mt of ore could be given out in quotas, and when they said this year they're cutting the mine allowance to 260 million-270 million mt, that had an immediate impact on the LME nickel price. It went from $14,500 per ton [in December 2025] to $18,000-$19,000/mt [in January 2026]," said Werner.

According to him, the government would like to see a nickel price that translates into better margins for producers, and $18,000/mt to $20,000/mt could be a level that leaves a good margin for Indonesian producers but would not encourage producers in other countries to restart their operations.

However, when Indonesia's energy and mineral resources ministry said recently that the country's approved nickel ore output could be higher than initial guidance as a result of miners' proposed RKAB revisions, the LME three-month nickel price lost almost $1,000/mt in the space of a week, cooling to $16,700/mt on June 26 from $17,754/mt on June 22.

Although planning ahead can be challenging -- because "you don't know quite what the government will give you" -- Werner reckons that in 2027, Nickel Industries could produce 120,000 mt of nickel in nickel pig iron and 80,000 mt to 100,000 mt of nickel in MHP, cathode and nickel sulfate, with that mix expanding the company's exposure to superalloys and battery sectors.

Since Indonesia offers some of the lowest production costs for nickel, Nickel Industries is unfazed by nascent deep-sea mining of nickel-rich nodules, which could begin as soon as next year.

"I don't think it will be able to compete with Indonesian producers. The technical complexities of mining at very deep depths on the ocean floor, where you have currents and storms, should make it quite high-cost. We'll see what happens, but I do think there will be challenges in permitting," said Werner.

He added that some prospective deep-sea producers had approached the company about the possibility of processing their nodules at its plants. "We looked at it, and we just didn't think it would make any money," he said.