Indonesia’s nickel supply glut, slowing EV demand could ‘jeopardise’ Chinese miners

A deluge of investments into Indonesia’s refining capacity over the past few years has led to an ‘oversupply’, experts say

Muted EV demand due to the Ukraine war and competition from LFP batteries, which don’t require nickel, could also ‘jeopardise’ Chinese miners

Reading Time:4 minutes

A truck loads raw nickel ore at a mining site in South Sulawesi province. Photo: Reuters

Published: 5:30pm, 8 Dec 2023

China has embedded itself firmly into Indonesia’s burgeoning nickel industry over the past decade, but with nickel prices facing sharp drops, some Chinese miners are feeling the pressure.

The price of nickel fell by around 50 per cent in November since its year-to-date peak in January, making it the worst-performing metal on the London Metal Exchange this year.

The primary reason for this decline is the huge oversupply of the commodity caused by a deluge of investments into Indonesia’s refining capacity over the past three to four years, experts say.

“The demand for nickel is rising fast, but supply is increasing much faster, mainly due to this rise in production in Indonesia,” said Kyunghoon Kim, an associate research fellow focusing on industrial policies at the Korea Institute for International Economic Policy (KIEP).

A worker at an Indonesian nickel processing plant in South Sulawesi. Photo: AP

Indonesia lays claim to the world’s largest nickel reserves, and the commodity has become especially lucrative with the growth of electric vehicles globally.

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