Indonesia, the world’s top nickel producer, has significantly increased its nickel ore imports from the Philippines in recent months due to rising smelter demand and domestic supply challenges, according to sources familiar with the matter.
Indonesia’s nickel ore imports from the Philippines likely hit around 500,000 metric tons in April and May, more than double the March volumes, two local smelters and a trader told Reuters. These monthly totals would also top the country’s total imports from the Philippines for all of last year, which came in at 374,454 tons.
The surge in imports is driven by several factors:
Increasing demand from Indonesian nickel smelters, mostly operated by Chinese companies, which have been rapidly expanding capacity in recent years.
Delays in the issuance of mining quotas by the Indonesian government, a necessary approval process for mining companies. Changes in the permit validity period and pending obligations like unpaid royalties have slowed down the approval process.
Heavy rains this month that disrupted truck deliveries of ore from mines to smelters, further tightening domestic supply.
The tight supply of nickel ore has constrained the output of Indonesian nickel pig iron (NPI) and supported prices of nickel products, which are used in stainless steel and electric vehicle batteries, both in Indonesia and top consumer China.
Analysts expect the current tightness to ease by mid-year as the Indonesian government increases approvals of mining quotas. However, the pace of approvals has remained slow, with the government stating that the approved quotas of over 200 million tons this year are “already sufficient.”
“Regarding imports from the Philippines, as long as the prices are the same, this can help lengthen the lifespan of our reserves,” said Tri Winarno, a director at the Energy and Mineral Resources Ministry.
The surge in Philippine nickel ore imports underscores the challenges Indonesia is facing in meeting the growing demand from its domestic smelting industry, despite being the world’s top nickel producer.