Indonesian primary nickel producers on the rise

Primary nickel production in Indonesia surged in the second quarter with two of the five largest reporting producers booking double-digit increases compared to the previous year, while production from the two largest global primary nickel producers declined, according to S&P Global Market Intelligence data.

Indonesia has become a major supplier of battery-grade nickel as it develops processing operations to turn its ore into material useful for the global energy transition. PT Vale Indonesia Tbk produced 16,922 metric tons of primary nickel in the second quarter, jumping 34.7% year on year, and Nickel Industries Ltd.'s output more than doubled over the period, increasing to 25,032 metric tons.

Nickel Industries' Hengjaya mine in Indonesia hit a production record during the second quarter and the company's Oracle smelter, also located in the South Pacific nation, is set to increase capacity in the third quarter, Justin Werner, the company's managing director said July 31 during an earnings call.

"We, in a little over almost five years, have been able to rapidly grow the company," Werner said during the call. "In terms of Nickel Industries' attributable nickel metal production, [we have grown annual output] in excess of 100,000 [metric] tons."

Nickel Industries' production in the recent quarter approached that of diversified mining giant Glencore PLC. The Swiss company's primary nickel production declined 5.9% year over year to 25,500 metric tons in the second quarter.

Russian nickel giant PJSC MMC Norilsk Nickel remains the leader in primary nickel production, putting out 44,650 metric tons of nickel in the second quarter. Production was off by 7.9% compared to a year earlier and by 4.1% compared to the prior quarter. The company attributed the dip in output to planned maintenance as well as the annual pause in shipping at the Port of Dudinka.

IGO Ltd., the world's largest producer of mined nickel, extracted 9,549 metric tons in the second quarter, increasing by 46.7% year on year and by 14.2% quarter on quarter.

Sumitomo Corp. increased quarterly output by 1,000 metric tons year over year to reach 5,400 metric tons, while Zimplats Holdings Ltd. upped its quarterly production by 110 metric tons.

The biggest drop in mined production was reported by Boliden AB (publ). The Swedish mining company produced 2,115 metric tons in the second quarter, decreasing by 33.8% compared to the prior-year period, and by 19.0% compared to the first quarter.

"The big thing on the smelter side throughput is the very major maintenance [shutdown] that we had in Harjavalta, which was well communicated beforehand," Mikael Staffas, Boliden president and CEO, said July 20 during a second-quarter earnings call.

Nickel prices declined during the second quarter. The London Metal Exchange cash nickel price dropped to $19,856 per metric ton as of June 28, which was both the lowest for the quarterly period and the lowest price recorded since reaching $19,333/t on July 15, 2022.

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