Nickel Mines Stop Production amid Price Uncertainty

Summary

Several nickel miners choose to stop any mining activity and production following the ban on nickel ore export since January 1, 2020, as well as the increasingly uncertain domestic trade. At the moment, there is no nickel price limitation for the nickel ores sales from the producers to the smelters. Previously, by the end of October 2019, the government set the ceiling price at US$ 30 per metric tons and the floor price at US$ 27 per metric tons as a result of the untimely import ban.

However, the limit would not be in effect after December 31, 2019, and, consequently, the price limitation is nonexistent at the moment. The government set the previous limit based on business-to-business deals, not purely based on mineral benchmark prices (HPM) for domestic trade.

On the other hand, the nickel mining companies not only worry about price uncertainty but also have to pay the increase of the nickel royalty fee from five percent to 10 percent. The companies’ decision to stop the production is therefore understandable, considering they have to spend extra money despite unable to generate enough profits caused by the uncompetitive price setting.

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