Revised nickel ore HPM raises cost pressure on Indonesia HPAL projects

By Adianto P. Simamora

The newly revised mineral benchmark price (HPM) formula is expected to raise cost pressure on Indonesia’s high-pressure acid leach, or HPAL, projects, according to Agus Superiadi, a senior mining advisor and consultant.

“The biggest negative impact will be faced by HPAL projects in Indonesia because the increase in limonite ore prices will certainly reduce competitiveness,” he said.

He said the new HPM for saprolite nickel ore is approaching the current market price, while the new HPM for limonite ore is about twice the current market price. He added that the rise in limonite prices would significantly increase mixed hydroxide precipitate, or MHP, production costs, especially as sulphur prices have also increased.

Read also: Nickel smelter industry urges delay to HPM hike, export duty plan

Agus said the situation is being worsened by challenges in meeting ore demand due to nickel ore production quota restrictions imposed by the government. Several HPAL projects in Indonesia could face losses in the coming months if MHP prices do not increase significantly, he added.

He also warned that the higher ore pricing could erode the economics of downstream projects linked to nickel-based battery raw materials.

Agus said a deeper study and evaluation are needed to define an optimum HPM formula that can accommodate the government’s intention to increase non-tax revenue while sustaining competitiveness

Edirting by Reiner Simanjuntak