GEM MHP output cut tightens Indonesia battery nickel feedstock

GEM

A GEM MHP output cut in Indonesia is tightening near-term nickel feedstock for batteries. Market participants say GEM will halve monthly mixed hydroxide precipitate output to about 6,000t nickel equivalent. However, limited tailings capacity at Morowali operations drives the decision.

This is the second forced cut tied to tailings disposal constraints. In March, a landslide at subsidiary QMB halted output for 45 days. Meanwhile, the plant restarted in May and returned to design rates in July.

The scale of GEM’s Indonesian portfolio makes the cut market-relevant. It runs three MHP projects with 150,000t/yr nameplate capacity across Sulawesi. Output reached 79,916t nickel equivalent in January–September, up 150% year on year. Therefore, a move to 6,000t per month can dampen spot MHP availability.

MHP economics and cobalt content reshape feedstock choices

MHP demand rose because it can replace nickel matte in downstream refining. Producers value MHP’s economics and its cobalt content for precursor production. Meanwhile, Democratic Republic of Congo export restrictions tightened cobalt availability and lifted MHP interest. As a result, tighter MHP supply can ripple into nickel sulfate and cathode schedules.

Tailings and ESG pressure intensify in Indonesia’s HPAL boom

Indonesia’s HPAL expansion has increased tailings volumes and raised ESG scrutiny. Companies must prove safe disposal as investors and customers demand traceability. Meanwhile, the government has suspended some mines for weak reclamation guarantees. Authorities also seized land from Weda Bay Nickel and Tonia Mitra Sejahtera over forestry permit gaps.

The Metalnomist Commentary

The GEM MHP output cut shows how waste management now caps nickel growth, not ore supply. However, repeated disruptions will push buyers toward diversified feedstock and stricter contracts. Therefore, Indonesian HPAL operators must invest early in tailings systems to protect market access.