EGA Guinea Bauxite Supply Deal Restores Route to UAE Alumina Operations

Bauxite

EGA Guinea bauxite supply has moved closer to normalisation after Emirates Global Aluminium reached an amicable settlement with Guinea over the revocation of its bauxite mining licence. The agreement will allow Guinean producer CBG to resume bauxite shipments to EGA’s operations in the UAE.

EGA Guinea bauxite supply had been disrupted since Guinean customs suspended shipments from EGA subsidiary Guinea Alumina in October 2024. The suspension followed delays in EGA’s plan to build an alumina refinery in Guinea.

EGA Guinea bauxite supply became more uncertain in 2025 when Guinea revoked EGA’s bauxite mining licence and reassigned it to newly created state-owned firm Nimba Mining. GAC continued to seek redress through legal action before the latest settlement.

The agreement includes a lump-sum payment by Guinea to GAC for the transfer of assets to Nimba Mining. It also renews EGA’s bauxite supply agreements with CBG under mutually beneficial commercial terms.

Guinea Settlement Reopens a Strategic Bauxite Channel

The settlement is important because Guinea is one of the world’s most important bauxite supply sources. Its high-volume export role makes it central to alumina refineries and integrated aluminium producers.

For EGA, access to Guinean bauxite supports feedstock security for its Al Taweelah alumina refinery in the UAE. Stable bauxite supply is essential because alumina production depends on consistent ore quality, logistics and long-term commercial arrangements.

The dispute also shows how resource nationalism is reshaping aluminium raw material supply. Guinea has been pushing for more domestic value creation and stronger state control over mining assets.

The revocation of EGA’s licence formed part of a broader review of more than 50 mining licences granted over the past two decades. Those licences covered bauxite, iron ore, gold, diamonds and graphite.

By transferring assets to Nimba Mining while renewing supply through CBG, Guinea preserves more state influence while allowing trade with EGA to resume. This gives both sides a practical route out of a prolonged dispute.

For the wider aluminium market, the settlement reduces one layer of uncertainty around bauxite flows. However, it also reinforces the need for producers to manage political risk in key mining jurisdictions.

Hormuz Disruption and Smelter Damage Still Cloud Recovery

The bauxite agreement does not immediately remove all operational risk for EGA. The resumption of shipments to Al Taweelah depends on the reopening of the Strait of Hormuz, which has been disrupted by the US-Israel and Iran war.

This adds a logistics risk to the feedstock recovery. Even with commercial terms resolved, bauxite and alumina supply chains still depend on safe shipping routes through one of the world’s most strategic maritime chokepoints.

EGA is also dealing with damage at its Al Taweelah aluminium smelter after a missile attack on 28 March. Operations there could take a year to resume, creating a separate challenge for the company’s primary aluminium output.

The situation highlights the dual exposure of integrated aluminium producers. They need secure upstream bauxite and alumina supply, but they also need reliable power, smelter operations and shipping routes.

For EGA, the Guinea settlement is a major positive for raw material continuity. But the company’s near-term recovery will still depend on geopolitical stability, shipping access and the pace of repairs at Al Taweelah.

The broader industrial message is clear. Aluminium supply security now depends on more than ore availability. It requires political settlement, maritime access, energy security and resilient smelting infrastructure.

The Metalnomist Commentary

EGA’s settlement with Guinea shows that bauxite supply is becoming a political asset, not just a mining contract. The deal restores an important feedstock route, but Hormuz disruption and Al Taweelah damage show how fragile integrated aluminium supply chains have become.

Mercuria Venezuela Offtake Agreements Signal Push to Reopen Mineral Exports

Mercuria

Mercuria Venezuela offtake agreements mark a significant attempt to reconnect Venezuelan mineral supply with international markets. The Switzerland-based trading and mining group has signed strategic offtake agreements with investment firm Heeney Capital covering Venezuelan bulk commodities and gold projects.

Mercuria Venezuela offtake agreements are expected to support initial mineral exports worth about $2.2bn/yr. The partners are also advancing possible transactions in aluminium, nickel and ferrous products that could represent another $3bn/yr in export value, subject to regulatory approvals.

The agreements come as US government officials and industry participants visited Caracas to support new investment frameworks and supply agreements in oil and mining. The timing shows how raw materials trade is becoming more closely tied to diplomacy, sanctions policy and western supply-chain security.

Mercuria Venezuela offtake agreements also fit the trader’s broader expansion into metals and minerals. The company is using offtake structures to secure future supply while positioning itself in markets where conventional financing remains difficult.

Venezuela’s Aluminium and Nickel Revival Will Require Capital

Venezuela has historically been an important producer and exporter of aluminium, iron ore and other bulk commodities. However, its industrial base has weakened after years of underinvestment, power shortages, sanctions constraints and operational deterioration.

The aluminium sector is a clear example. Restarting or expanding output will require reliable electricity, working capital, plant rehabilitation, spare parts, logistics and customer confidence.

Nickel and ferrous products offer additional potential, but they face similar execution challenges. Resource availability alone will not be enough. Venezuela must rebuild industrial reliability and prove that export flows can operate consistently.

This makes Mercuria’s role important. A trading group can provide offtake, financing support, logistics expertise and market access without taking the same full risk as a mine owner or plant operator.

For Venezuela, the agreements could help generate export revenues and attract additional foreign capital. For western buyers, they could create another source of raw materials outside more concentrated supply chains.

Still, regulatory approval remains critical. Sanctions, compliance requirements and political risk will determine how quickly these agreements can move from announcement to physical trade.

Offtake Deals Reflect a New Metals Geopolitics

The structure of the agreements shows how metals trading is changing. Offtake deals are no longer just commercial purchase contracts. They are becoming tools for supply security, project restart and geopolitical alignment.

Commodity traders can secure future material while helping producers revive exports. This model is especially useful in jurisdictions where banks may hesitate, governments want fast results and buyers need alternative supply.

Mercuria’s Venezuela strategy also reflects the wider shift in western raw materials policy. The US and its allies are looking for new sources of industrial materials as supply chains become more fragmented and politically exposed.

This does not mean Venezuela can quickly return to full historical production levels. The country’s mining and metals infrastructure needs investment, operational discipline and credible long-term governance.

However, the strategic logic is clear. If Venezuela can reopen parts of its extractive industry under workable investment frameworks, it could become a useful supplementary source for aluminium, nickel, ferrous products and gold.

For Mercuria, the opportunity is to move early. By securing offtake and building relationships before assets fully recover, the trader can gain access to material flows that may become more valuable as western supply chains diversify.

The broader metals market should watch whether these agreements lead to actual export volumes. The first test will be regulatory clearance, followed by financing, rehabilitation and shipment execution.

The Metalnomist Commentary

Mercuria’s Venezuela agreements show that metals offtake is becoming a geopolitical instrument. The opportunity is large, but the real test will be whether Venezuela can rebuild reliable production and export systems after years of industrial decline.

 

VR8 Vanadium Slag Offtake Deal Links Steelpoortdrift to US Vanadium Supply

Vanadium Resources

VR8 vanadium slag offtake plans have advanced after Australia-listed Vanadium Resources signed a non-binding agreement with US Vanadium Holding. The agreement covers vanadium-bearing slag from VR8’s proposed V-Iron critical minerals smelter in South Africa.

VR8 vanadium slag offtake would give US Vanadium access to all production from the V-Iron plant. The facility is planned to process high-grade vanadium-titanium magnetite ore from VR8’s Steelpoortdrift project.

VR8 vanadium slag offtake is strategically important because Steelpoortdrift sits in South Africa’s Bushveld Complex, one of the world’s most important vanadium-bearing regions outside China and Russia.

The project contains 4.74mn t of vanadium pentoxide, giving VR8 a large resource base for future vanadium supply. The V-Iron plant will also produce pig iron, adding another commercial product stream.

Steelpoortdrift Could Support Ex-China Vanadium Supply

Steelpoortdrift’s location in the Bushveld Complex gives the project strategic weight. The region hosts major vanadium-titanium magnetite resources and remains one of the few large-scale alternatives to China and Russia.

This matters because vanadium is becoming more important for steel, energy storage, industrial alloys and defence-related supply chains. Vanadium improves steel strength and is also used in vanadium redox flow batteries for long-duration energy storage.

The proposed V-Iron plant would process Steelpoortdrift ore into vanadium-bearing slag. That slag can then be used as feedstock for downstream vanadium recovery.

Recent testing by US Vanadium confirmed that high-grade slags from Bushveld Complex ores are suitable for its facility. This technical validation is important because slag quality, chemistry and recoverability will determine commercial value.

The agreement gives VR8 a potential downstream customer before the smelter reaches final investment stage. It also gives US Vanadium a possible future feedstock source tied to a large non-China resource base.

Binding Offtake Depends on Feasibility Study

The current agreement is non-binding. VR8 and US Vanadium plan to negotiate a binding offtake after completion of the V-Iron feasibility study.

That study will be critical. It must confirm capital costs, operating costs, slag quality, pig iron economics, processing route, logistics and project execution risk.

If the companies do not reach a binding agreement, VR8 will grant US Vanadium a right to match any third-party offer for 20% of the plant’s vanadium slag output. This keeps US Vanadium commercially positioned even if negotiations change.

For VR8, the agreement supports project credibility. Early customer interest can strengthen financing discussions and show that downstream processors are willing to evaluate Steelpoortdrift-derived material.

For US Vanadium, the deal fits a wider supply security trend. Western processors are looking for reliable feedstock sources outside dominant supply regions, especially for critical minerals with concentrated production chains.

The broader market implication is clear. Vanadium supply chains are becoming more strategic as long-duration energy storage and high-strength steel demand grow. Projects that can connect resource, smelting and qualified downstream processing will attract stronger attention.

The Metalnomist Commentary

The VR8-US Vanadium agreement shows that vanadium strategy is moving from resource ownership toward integrated feedstock security. Steelpoortdrift’s value will depend on whether the V-Iron plant can turn Bushveld ore into reliable slag supply for downstream processors.

Indonesia Nickel Pricing Sets Floor and Ceiling as HPAL Costs Rise

Huafei Nickel Cobalt

Indonesia nickel pricing is increasingly defining the global nickel market as ore quotas, benchmark pricing rules and sulphuric acid availability reshape supply economics. UK broker Sucden Financial said Indonesia is now setting both the floor and ceiling for nickel prices.

Indonesia nickel pricing has moved the market away from a simple oversupply story. The key question is no longer only how much nickel Indonesia can produce, but how tightly Jakarta chooses to manage supply.

Indonesia nickel pricing is also becoming more important because HPAL producers face rising costs for ore, sulphur and sulphuric acid. These inputs directly affect mixed hydroxide precipitate production, which feeds battery-grade nickel supply chains.

The London Metal Exchange nickel price settled at $19,500/t on Wednesday, while Sucden said Indonesia’s current policy stance is creating a firmer floor around $18,000/t. But upside may also be capped if higher prices encourage new quota approvals.

Indonesia Turns Ore Policy Into Market Control

Indonesia remains the central force in nickel because it controls the largest source of new supply. In recent years, Indonesian output growth, large exchange stocks and Chinese-linked processing capacity defined the market.

That structure is now changing. Sucden said Indonesia appears focused on supporting prices and discouraging weaker producers, rather than allowing unrestricted supply growth.

The country has reduced 2026 ore quotas by around 30% year on year. It has also revised its domestic benchmark ore pricing system, strengthening the link between ore valuation, contained metals and producer costs.

This policy approach gives Indonesia unusual pricing power. If supply is restricted, the market finds a firmer floor. If prices rise too far, Indonesia can relax quotas and allow more material through the system.

That means nickel’s upside is managed. Sucden warned that the market should become more cautious near $20,000/t, where additional supply approvals and producer hedging could begin to limit further gains.

This is why Indonesia now acts as both support and restraint. It can tighten ore availability to stabilise prices, but it can also prevent a strong rally from damaging downstream competitiveness.

The result is a more policy-driven nickel market. Traditional inventory and demand indicators still matter, but Jakarta’s quota and ore pricing decisions are now central to global price formation.

HPAL Costs Expose Battery Nickel Supply Risk

HPAL production is becoming the second major driver of nickel pricing. Unlike nickel pig iron and ferro-nickel, HPAL is highly dependent on sulphur and sulphuric acid.

This makes battery-grade nickel supply more vulnerable to chemical input availability. HPAL plants need stable acid supply to process limonite ore into MHP, and Indonesia’s inventory buffers are relatively tight.

Huayou’s decision to place half of its Huafei Nickel Cobalt MHP capacity into temporary care and maintenance from 1 May shows how quickly reagent costs can affect production. The company cited elevated sulphur costs and prolonged high operating rates.

The HPAL sector now faces a double squeeze. Ore prices are rising because of Indonesia’s revised pricing framework, while sulphur and sulphuric acid costs are increasing because of tighter chemical supply.

This changes the nickel cost curve. Producers with secure ore, sulphur access and integrated infrastructure can operate more defensively. Those relying on external feedstock or exposed to high reagent prices face greater margin pressure.

The shift also matters for battery supply chains. MHP is a key intermediate for nickel sulphate and other battery chemicals. If HPAL margins weaken, battery-grade nickel output can become less responsive than headline capacity numbers suggest.

Sucden said tighter nearby spreads and higher trading volumes may indicate increased hedging and another shift in market balance. That suggests producers and traders are adjusting to a market where costs and policy now matter more than simple surplus.

Nickel is still not structurally tight like copper. But it is no longer a market where oversupply alone explains price direction. Indonesia’s supply discipline and HPAL cost inflation are giving nickel a stronger base, even if the rally remains capped.

The Metalnomist Commentary

Indonesia has turned nickel into a managed market where policy controls supply and chemistry controls cost. The winners will be producers with secure ore, acid access and enough balance-sheet strength to survive Jakarta’s tighter discipline.

Anglo American Copper Output Rises as Chile Offsets Quellaveco Grade Decline

Anglo American, Copper

Anglo American copper output rose slightly in the first quarter as stronger Chilean mine performance offset lower grades at Quellaveco in Peru. The global mining group produced 170,400t of copper during the quarter, up 1% from a year earlier.

Anglo American copper output was supported by higher throughput at Los Bronces and Collahuasi, along with improved recoveries at Collahuasi. Chilean copper production increased by 9% to 97,000t, while Peruvian output fell by 8% to 73,400t.

Anglo American copper output remains on track with unchanged 2026 guidance of 700,000-760,000t. The company had already lowered that target in February because of expected lower grades at Collahuasi.

The result confirms that copper remains Anglo’s strategic centre as the group continues reshaping its portfolio. Nickel is moving toward disposal, manganese is recovering from weather disruption, and copper is becoming the company’s clear lead business.

Los Bronces and Collahuasi Support Chilean Copper Performance

Los Bronces output rose by 12% to 48,500t after the restart of its second plant. The restart improved throughput and gave Anglo a stronger base in Chile during the quarter.

Collahuasi also delivered a stronger result. Anglo’s attributable share of production rose by 10% to 38,800t, supported by higher throughput and improved recoveries.

These gains helped offset weaker output from Quellaveco. The Peruvian mine faced expected lower grades, reducing copper production despite its importance as one of Anglo’s major growth assets.

The first-quarter result shows how copper production increasingly depends on ore grade, plant availability and recovery performance. Higher throughput can support output, but grade decline remains a major constraint across the industry.

Anglo’s growth is still weighted toward the second half of the year. Market attention will focus on Collahuasi’s return to higher-grade ore, the ramp-up of desalination capacity and the continued benefit from Los Bronces’ second plant restart.

The proposed merger with Teck Resources also remains important. Anglo said the deal is still on track for completion between September 2026 and March 2027. South Korean approval has been secured, leaving Chinese anti-monopoly clearance as the final major regulatory hurdle.

If completed, the merger would deepen Anglo’s copper exposure and reinforce the industry trend toward scale in high-quality copper assets.

Nickel Falls as Manganese Rebounds From Weather-Hit Base

Anglo’s nickel production fell by 7% year on year to 9,100t because of maintenance at Barro Alto and Codemin in Brazil. Barro Alto output declined by 7% to 7,500t, while Codemin fell by 6% to 1,600t.

The company expects nickel production to improve gradually from the second quarter. However, nickel is no longer central to Anglo’s long-term portfolio strategy.

Anglo is still working through the European Commission’s anti-monopoly review of the agreed sale of its nickel assets to MMG Singapore Resources. The deal is worth up to $500mn.

Manganese ore output rose sharply from a weak base. Anglo’s 40% attributable production jumped by 118% to just over 759,000t after operations recovered from the disruption caused by tropical cyclone Megan in early 2025.

Sales volumes rose even more strongly, increasing by 217% to 946,000t. However, weather still affected the business, with second-quarter output down 16% from the fourth quarter of 2025 because of adverse weather and cyclone Narelle.

The portfolio direction is now clearer. Anglo is prioritising copper and iron ore while continuing sale processes for steelmaking coal and De Beers. Nickel is becoming a disposal asset, and manganese remains a recovery story after weather-related disruption.

For copper markets, Anglo’s modest first-quarter increase is less important than its second-half execution. The company needs stronger grades, stable plant performance and project discipline to support its full-year copper target.

The Metalnomist Commentary

Anglo American’s first quarter shows that copper growth is increasingly a quality-of-ore and processing-efficiency story. The strategic focus now shifts to whether Collahuasi, Los Bronces and the Teck merger can turn Anglo into a more copper-led mining company.

Nickel Industries Indonesian Output Shows Ore Pressure Despite HPAL Growth

Nickel Industries, Indonesian

Nickel Industries Indonesian output was mixed in the first quarter as lower mining volumes and declining nickel grades contrasted with higher nickel pig iron and mixed hydroxide precipitate production. The Australia-based producer reported weaker ore output but stronger downstream processing across its Indonesian RKEF and HPAL assets.

Nickel Industries Indonesian output reflects the increasingly complex operating environment for nickel producers in Indonesia. Mining permits, ore grades, sulphur availability and downstream ramp-up timing are all shaping production performance.

Nickel Industries Indonesian output also shows why Indonesia’s nickel market can no longer be viewed only through capacity additions. Feedstock access and ore quality are becoming just as important as new processing plants.

Total nickel ore production fell by 30% from a year earlier to 3.96mn wet metric tonnes in January-March. However, output almost tripled from the previous quarter after mining activity recovered from RKAB quota delays late last year.

RKAB Quota Recovery Supports Ore Flow but Grades Weaken

Nickel Industries received 14.3mn wmt of 2026 RKAB nickel ore quota this year. This was 36% higher than its total approved quota of 10.5mn wmt in 2025.

The higher quota helped production recover from the December quarter, when mining was disrupted by RKAB delays. The company also plans to apply for additional RKAB quotas later this year.

The Hengjaya mine supplies ore to Nickel Industries’ RKEF and HPAL plants. These facilities produce nickel pig iron for stainless steel markets and mixed hydroxide precipitate for battery material supply chains.

Total NPI output from the Hengjaya, Ranger, Oracle and Angel RKEF operations rose by 4.4% year on year and 1.7% quarter on quarter to 274,086t.

However, nickel-contained production fell to 30,264t because the average nickel content of NPI dropped to 11% from 12.1% a year earlier. This is a critical signal for margins because lower grades reduce metal output even when furnace volumes rise.

The result shows how Indonesian nickel producers face a tightening relationship between ore availability and processing efficiency. Higher RKEF output does not automatically mean stronger nickel production if feedstock grades weaken.

HPAL Growth Continues as ENC Start-Up Moves to Second Quarter

Nickel Industries’ Huayue Nickel Cobalt HPAL project produced 21,526t of nickel and 2,370t of cobalt in MHP form during the first quarter. Nickel output rose by 1.7% from a year earlier, while cobalt output increased by 23%.

This growth strengthens Nickel Industries’ exposure to battery materials. MHP remains a key intermediate product for nickel sulphate and other battery chemical supply chains.

The company’s next major step is the Excelsior Nickel Cobalt HPAL project. Commissioning has been delayed to the second quarter, with full ramp-up targeted by the end of October.

ENC had previously been expected to start commissioning in the first quarter. The delay matters because HPAL projects are technically complex and depend on stable feedstock, acid supply, utilities and commissioning discipline.

Nickel Industries said it has enough sulphur inventory to support ENC’s ramp-up until the third quarter. The company previously bought sulphur at an average price of $450/t.

Sulphur availability is now a strategic issue for HPAL producers. Any disruption in sulphur or sulphuric acid supply can raise costs and slow production growth across Indonesia’s battery nickel chain.

The company also plans to list nickel cathode produced at ENC on both the London Metal Exchange and Shanghai Futures Exchange. Exchange approval would support market acceptance and improve the project’s commercial flexibility.

Nickel Industries increased its stake in ENC by 2% for $46mn on 1 April, lifting its interest to 46% and making it the project’s largest shareholder. This gives the company greater exposure to Indonesia’s move from NPI and MHP toward Class I nickel products.

The broader implication is clear. Nickel Industries is moving across the Indonesian nickel value chain, from ore mining and RKEF production into HPAL, MHP and exchange-deliverable cathode.

The Metalnomist Commentary

Nickel Industries’ quarter shows that Indonesia’s nickel growth is becoming more constrained by ore quality, RKAB permits and sulphur logistics. Capacity still matters, but the winners will be producers that control feedstock, manage HPAL complexity and secure recognised Class I nickel routes.

LB Titanium Dioxide Output Falls as Sponge and Battery Materials Expand

LB Titanium

LB titanium dioxide output fell in 2025 as weaker prices, slower demand and rising trade barriers pressured the global pigment market. China’s largest titanium producer reported titanium dioxide production of 1.28mn t, down 1.5% from a year earlier.

LB titanium dioxide output declined even as sales edged higher to 1.26mn t. Domestic sales accounted for 45% of volumes, while international sales made up 55%, showing that overseas markets remain critical to the company’s TiO2 business.

LB titanium dioxide output came under pressure from structural oversupply. New capacity entered the market, prices weakened and several domestic producers cut operating rates to protect margins.

The company also pointed to anti-dumping duties imposed by the EU, Brazil, Saudi Arabia and the Eurasian Economic Union, along with higher US tariffs on Chinese material. These measures have fragmented trade flows and made the global titanium dioxide market more difficult for Chinese exporters.

Titanium Sponge Offers a Stronger Counterweight

LB’s titanium sponge business moved in the opposite direction. Titanium sponge output rose by 2.3% on the year to 71,300t, while sales increased by 0.9% to 67,500t.

The stronger sponge result matters because titanium sponge sits closer to aerospace, industrial titanium mill products and high-performance alloy supply chains. It gives LB a more diversified titanium platform beyond pigment markets.

Titanium sponge prices were also firmer. Domestic 99.7% grade sponge prices averaged 49,665 yuan/t ex-works in 2025, up from 48,270 yuan/t a year earlier.

LB has 80,000 t/yr of titanium sponge capacity, the largest globally. That scale gives the company a major position in a market where feedstock security, product quality and downstream demand from titanium processors remain strategically important.

Titanium concentrate output fell by 3% to 1.45mn t, but LB did not sell concentrate externally. All concentrate was consumed internally to produce titanium dioxide and titanium sponge.

This internal use highlights the company’s integrated titanium value chain. LB can direct feedstock toward different downstream products depending on market conditions, although weak TiO2 demand still affects overall profitability.

Iron ore concentrate output fell more sharply, dropping by 18% to 3.04mn t. Sales decreased by 2.1% to 2.94mn t, showing softer performance in another mineral by-product stream.

Iron Phosphate Growth Signals Battery Materials Diversification

LB’s battery materials business showed much stronger momentum. Iron phosphate output jumped by 72% to 97,600t, while sales rose by 59% to 96,000t.

The growth was driven by firm demand from the lithium-ion battery sector. Iron phosphate is a key precursor for lithium iron phosphate cathode materials, which are widely used in electric vehicles and energy storage systems.

This diversification is strategically important. Titanium dioxide remains LB’s largest product line, but the pigment market is facing oversupply, trade restrictions and weaker pricing. Battery materials offer a different growth channel tied to China’s expanding LFP ecosystem.

LB has 100,000 t/yr of iron phosphate capacity and 50,000 t/yr of LFP capacity. It also has 25,000 t/yr of graphite anode capacity and 50,000 t/yr of graphitisation capacity.

That product base positions LB across titanium, zirconium and battery materials. The company is no longer only a titanium dioxide producer, even though it remains the world’s largest TiO2 producer with 1.51mn t/yr of capacity.

The 2025 results show a clear split in the business. Titanium dioxide is under pressure from oversupply and trade action. Titanium sponge is holding stronger. Iron phosphate is growing with battery demand.

For LB, the industrial challenge is to manage a mature pigment business while expanding higher-growth materials platforms. Its integrated mineral base gives it flexibility, but market conditions across TiO2, sponge and battery materials are moving in different directions.

The Metalnomist Commentary

LB’s results show how Chinese titanium producers are moving beyond pigment exposure into sponge and battery materials. The strategic value lies in feedstock integration, because companies that can shift internal mineral flows between TiO2, titanium sponge and battery precursors will be better positioned in volatile markets.

Nickel Deficit Forecast Emerges as Indonesia Tightens Ore Supply

Nickel manufacturing

Nickel deficit conditions are expected to return in 2026 as Indonesia tightens ore supply controls and stainless steel demand continues to grow. The International Nickel Study Group forecasts global primary nickel production of 3.715mn t against usage of 3.747mn t, implying a deficit of 32,000t.

The nickel deficit would mark a sharp change after three consecutive years of surplus. The market recorded surpluses of 175,000t in 2023, 116,000t in 2024 and 283,000t in 2025.

The nickel deficit forecast remains modest, but it carries strategic significance because it depends heavily on Indonesian policy. Indonesia has been the main driver of global nickel supply growth, and tighter controls on ore mining could slow the expansion that previously pushed the market into surplus.

The Middle East conflict is adding another layer of uncertainty. Higher energy prices, inflation pressure and disrupted sulphur flows could affect nickel production costs, especially for high-pressure acid leach operations in Indonesia.

Indonesia Ore Controls Reshape Nickel Supply Growth

Indonesia’s approved nickel ore mining quota for 2026 has been set significantly lower than in 2025. The quota can still be revised, but the initial reduction has already changed market expectations.

The country’s revised mineral benchmark pricing mechanism also took effect on 15 April. The new HPM formula raises base prices for all nickel ore grades and includes cobalt, iron and chromium in the valuation for the first time.

This matters because Indonesian nickel supply is no longer expanding under the same low-cost conditions that drove rapid output growth. Ore access, ore pricing, royalties and contained metal values are all becoming more tightly managed.

The policy impact is not evenly distributed. Eramet’s PT Weda Bay Nickel mine is preparing to enter care and maintenance in May after receiving an initial ore quota of just 12mn wet metric tonnes. This is far below last year’s final permit of up to 42mn wmt.

In contrast, Nickel Industries received quota approvals of 14.3mn wmt, up from 10.5mn wmt in 2025. This shows that Indonesia’s controls are not simply cutting all supply. They are also reshaping which operators receive ore access.

The quota system could therefore become a major competitive factor. Producers with larger approved volumes may gain stronger operating flexibility, while others face lower utilisation, higher costs or temporary shutdowns.

HPAL producers are especially exposed. These plants require steady limonite ore supply and large volumes of sulphuric acid or sulphur-linked feedstock. Tighter ore availability and higher reagent costs can quickly pressure margins.

Disrupted sulphur flows from the Middle East conflict have raised concern over HPAL feedstock availability. This is important because Indonesian HPAL projects have become key suppliers of mixed hydroxide precipitate for battery material production.

If sulphur costs remain elevated and ore prices rise under the new HPM formula, HPAL production costs could increase materially. That would weaken the low-cost supply advantage that helped Indonesia dominate battery-linked nickel intermediates.

Stainless Steel Supports Demand as Batteries Disappoint

Stainless steel remains the main support for nickel demand. INSG said the stainless steel sector grew in 2025 and is expected to expand further in 2026.

This is important because stainless steel still consumes far more nickel than the battery sector. Demand from stainless steel, alloys and industrial uses continues to anchor the primary nickel market.

Battery demand has grown more slowly than earlier expectations. Lithium iron phosphate chemistries have gained market share, reducing nickel intensity in parts of the electric vehicle market.

Plug-in hybrid electric vehicle demand has also outpaced fully battery-electric vehicle demand in some markets. This has limited the speed at which nickel-rich battery chemistries absorb new supply.

The result is a market caught between two forces. Supply growth is slowing because of Indonesian ore controls and higher input costs. However, battery demand is not rising fast enough to create a large structural shortage.

This makes the 2026 nickel deficit highly sensitive to policy and disruption. If Indonesia raises quotas, supply could recover. If sulphur, energy or ore costs worsen, the deficit could deepen.

The forecast also changes the market narrative. Nickel has spent recent years under pressure from surplus supply and rising inventories. A move into deficit, even a small one, could stabilise sentiment and support prices.

Still, the deficit is not yet a sign of broad scarcity. It is a warning that Indonesia’s supply discipline, not battery demand alone, is now determining the market balance.

For producers, cost control and ore access will become more important. For buyers, the focus will shift toward supplier reliability, feedstock route and exposure to Indonesian policy.

The Metalnomist Commentary

The nickel market is not tightening because batteries suddenly absorbed the surplus. It is tightening because Indonesia is putting discipline into ore supply while HPAL costs rise. That makes the nickel deficit more policy-driven than demand-driven.

HBIS Silico-Manganese Tender Prices Fall as China Steel Demand Weakens

Silico-Manganese

HBIS silico-manganese tender prices fell in April as weaker steel demand and higher spot alloy availability pressured China’s bulk alloy market. Hebei Iron and Steel cut its tender price for 65/17 grade silico-manganese to 6,300 yuan/t delivered and paid by acceptance bill.

The latest HBIS silico-manganese tender prices were down by 250 yuan/t from the previous tender. The state-owned steel producer increased April purchase volumes to 8,500t, up by 3,400t from its previous buying round.

HBIS silico-manganese tender prices are closely watched because they help set the tone for China’s manganese alloy market. The lower tender confirms that steel mills are using weak downstream demand and larger spot availability to push procurement costs lower.

The cut also reflects pressure from rising steel inventories. China Iron and Steel Association members held 18.63mn t of steel inventories as of 20 April, up 6.4% from early April and 12% from a year earlier.

Oversupply Weighs on Alloy Prices Despite Higher Tender Volumes

China’s domestic 65/17 silico-manganese alloy prices fell to 6,000-6,150 yuan/t ex-works on 23 April. This was down from 6,100-6,300 yuan/t on 9 April.

The price decline reflects continued oversupply in the market. Higher inventory pressure has limited the ability of alloy producers to defend prices, even when some steel demand shows signs of recovery.

HBIS’ higher purchase volumes gave the market some support, but not enough to reverse price direction. Buyers remain cautious because steel inventories are still elevated and construction demand has not yet fully recovered.

Some market participants are more optimistic about the steel outlook. Construction and infrastructure demand are expected to resume gradually, while domestic and seaborne steel demand improved in mid-April.

Chinese steel mills also lifted production slightly during that period. If steel output continues to rise, silico-manganese consumption could improve because the alloy is widely used in steel deoxidation and strengthening.

However, the recovery remains uneven. The higher HBIS buying volume suggests some restocking need, but the lower price shows that mills still hold negotiating power.

Ore Costs and Output Curbs Limit Downside Pressure

Many silico-manganese plants kept firm offers despite weaker spot prices. Higher manganese ore feedstock costs continue to support producer cost floors.

Output curbs at several large alloy producers in north China also helped limit deeper declines. Reduced production can help balance supply if demand recovers, but current inventory pressure remains the larger problem.

The market is therefore caught between two opposing forces. Weak steel demand and alloy oversupply are pushing prices lower, while ore costs and production curbs are preventing a sharper collapse.

This tension is typical of bulk alloy markets. Producers cannot easily cut prices below cost for long, but buyers can delay purchases when inventories are high and demand is uncertain.

For steelmakers, lower silico-manganese tender prices provide some cost relief. For alloy producers, the main challenge is preserving margins while feedstock prices remain firm.

The next market signal will come from whether steel demand improves enough to absorb alloy inventories. Without clearer consumption growth, manganese alloy prices may remain under pressure even if ore costs stay elevated.

The Metalnomist Commentary

HBIS’ tender cut shows that China’s silico-manganese market is still demand-led, despite higher ore costs. A real recovery will require stronger steel consumption and inventory drawdowns, not only higher tender volumes.

Eramet Weda Bay Nickel Faces Care and Maintenance Risk as RKAB Quota Tightens

Eramet - Nickel

Eramet Weda Bay nickel operations face a potential care and maintenance move in May after Indonesia approved a sharply reduced 2026 nickel ore quota. The French mining group said PT Weda Bay Nickel received an initial RKAB permit covering only 12mn wet metric tonnes of nickel ore production and sales.

The Eramet Weda Bay nickel quota is more than 70% below last year’s authorised level. PT WBN initially received 32mn wmt in 2025, later revised up to 42mn wmt.

Eramet has requested an upward revision to the 2026 permit. The company said the current quota will be exhausted by the middle of next month, making the permit decision the most important near-term issue for its nickel business.

The initial 12mn wmt permit includes 3mn wmt for internal use. This leaves Eramet’s external sales target at only 9mn wmt for 2026, well below the level implied by the mine’s operating capacity.

Indonesia’s RKAB Limits Threaten Ore Supply and NPI Continuity

PT Weda Bay Nickel is preparing to enter care and maintenance if the quota is not increased. Eramet said its nickel pig iron plant will continue operating using ore stocks, but the mining restriction creates clear supply risk.

The permit issue matters because Weda Bay is a key ore supplier inside Indonesia’s nickel ecosystem. Its saprolite ore supports nickel pig iron and stainless steel production, while limonite ore feeds high-pressure acid leach plants producing battery intermediates.

PT WBN delivered strong first-quarter output before the quota risk escalated. Marketable nickel ore production rose by 10% on the year to 10mn wmt.

External ore sales climbed by 54% to 8.3mn wmt. Saprolite sales increased by 27% to 4.8mn wmt, while limonite sales jumped by 118% to 3.6mn wmt.

The limonite increase was driven by stronger demand from HPAL plants at the Indonesia Weda Bay Industrial Park. Internal ore consumption for Eramet’s NPI plant was 1mn wmt during the quarter.

Strong sales partly reflected a weak comparison with early 2025, when IWIP plants were destocking after ending 2024 with high inventories. Still, the result shows that downstream demand remains firm.

PT WBN also continued to benefit from premiums of more than 100% above Indonesia’s benchmark floor price for high-grade saprolite. This reflected tight domestic ore supply and stronger competition for available material.

Nickel Market Rebalancing Depends on Permits, Sulphur and Ore Costs

Eramet’s nickel ferro-alloy production was broadly stable in the first quarter. Output reached 9,000t of nickel, down only 1% from a year earlier.

Adjusted nickel turnover, excluding New Caledonia’s Societe Le Nickel, rose by 43% to €163mn. Eramet’s share of PT WBN turnover, excluding its offtake contract, increased by 59% to €116mn.

The company said first-quarter market conditions were supportive. The average London Metal Exchange nickel price rose by 12% on the year to $17,362/t, driven partly by uncertainty over Indonesian ore supply.

Global primary nickel demand rose by 3% to 900,000t in the first quarter. Stainless steel, batteries and aerospace supported consumption.

Global primary nickel production fell by 3%, although the market remained in a modest surplus. Eramet said the nickel market could gradually rebalance over the rest of the year.

Restricted Indonesian mine permits are one reason. Sulphur supply problems are another, because they are raising costs for HPAL producers that depend on sulphuric acid or sulphur feedstock.

PT WBN’s production costs are expected to rise from 2025 levels. Eramet cited authorised volume limits, mining plan adjustments and higher fuel prices.

Indonesia’s revised mineral benchmark formula could also reshape ore economics. The formula, effective from mid-April, now includes cobalt and other contained metals in ore valuation.

This change could increase costs for HPAL feedstock and alter the economics of limonite supply. It also strengthens the government’s ability to capture more value from contained metals in nickel ore.

For Eramet Weda Bay nickel operations, the quota decision will determine whether strong first-quarter performance can continue. Without a higher RKAB, the mine faces a sudden operating constraint despite firm downstream demand.

The Metalnomist Commentary

Eramet Weda Bay nickel is becoming a test case for Indonesia’s tighter control over ore supply. If the RKAB quota is not revised, the impact will reach beyond one mine and reinforce cost pressure across NPI, HPAL and battery-linked nickel supply chains.

SHFE Indonesian Nickel Cathode Brands Strengthen Indonesia’s Class I Nickel Role

The Shanghai Futures Exchange

SHFE Indonesian nickel cathode brands have gained a major credibility boost after the Shanghai Futures Exchange approved two Indonesian-produced nickel cathode brands for delivery against SHFE contracts. The approvals cover PTENICO from Eternal Nickel Industry and DX zwdx from CNGR Dingxing New Energy.

The approvals mark an important step in Indonesia’s move from nickel ore and intermediate products toward exchange-deliverable Class I nickel. Indonesia has already become the world’s dominant nickel processing hub, but exchange approval gives its refined metal greater financial-market recognition.

SHFE Indonesian nickel cathode brands also reinforce the role of Chinese-backed industrial parks in building Indonesia’s downstream nickel value chain. Both approved producers are linked to major Chinese groups with strong positions in stainless steel or battery materials.

The development matters because exchange-deliverable nickel sits at the intersection of physical supply, futures market liquidity and industrial procurement. Approval by SHFE gives the brands wider acceptance among Chinese market participants and strengthens Indonesia’s role in Class I nickel trade.

Tsingshan and CNGR Extend Indonesia’s Refined Nickel Platform

Eternal Nickel Industry’s PTENICO brand was approved by SHFE after previously being listed on the London Metal Exchange on 16 December 2025. The company is a subsidiary of Chinese stainless steel producer Tsingshan Holding Group.

The plant is located in the Weda Bay Industrial Park in Halmahera, North Maluku. It uses an electrolytic process and has 50,000 t/yr of nickel cathode capacity, with nickel content of 99.96%.

Tsingshan’s involvement is strategically important. The group transformed global nickel markets through Indonesian nickel pig iron and stainless steel expansion, and it is now extending that influence into refined Class I nickel.

CNGR Dingxing New Energy’s DX zwdx brand was also approved by SHFE. The plant is located at the Indonesia Morowali Industrial Park and also uses an electrolytic process. It has 50,000 t/yr of nickel cathode capacity, with nickel content of 99.96%.

CNGR Dingxing is a subsidiary of CNGR, a major Chinese lithium-ion battery cathode active material precursor producer. This gives the brand a direct connection to battery materials supply chains, not only stainless steel demand.

The LME accepted CNGR Dingxing’s Indonesian nickel cathode brand in May 2024. It also approved cobalt cathode produced by CNGR in Qinzhou, Guangxi, in March, showing the company’s expanding exchange-approved metals footprint.

Together, PTENICO and DX zwdx represent 100,000 t/yr of Indonesian nickel cathode capacity. Their SHFE approval gives Indonesia a stronger position in futures-linked refined nickel supply.

Exchange Approval Changes Nickel Market Positioning

The two brands are the first Indonesian-produced nickel cathodes approved by SHFE for delivery. That is significant because Indonesia’s nickel rise was initially built around ore, nickel pig iron, ferronickel, matte and mixed hydroxide precipitate.

Exchange-deliverable cathode is a different market category. It requires tighter quality control, brand recognition and acceptance by financial and physical market users.

SHFE has approved Chinese-produced nickel cathode brands totalling 121,000 t since 2024. Adding Indonesian brands expands the pool of deliverable material and shows how Indonesia is being integrated into China’s nickel pricing and delivery system.

This could gradually influence nickel market structure. More deliverable Indonesian metal may improve flexibility for Chinese buyers, increase acceptable supply for futures settlement and strengthen the link between Indonesian production and Chinese exchange pricing.

The approvals also come during a period of Class I nickel oversupply. LME and SHFE inventories have risen as new refined nickel capacity has entered the market faster than demand growth from batteries and alloys.

Against that backdrop, brand approval can become a competitive advantage. Producers with exchange-deliverable status may have better access to financing, trade channels and customers that require recognised specifications.

For Indonesia, the approval supports a broader industrial policy objective. The country wants to capture more value from its nickel resources by moving beyond raw ore and intermediate exports into higher-value metal and battery materials.

For China, the approvals deepen supply-chain integration with Indonesian assets. Chinese companies are not only investing in Indonesian mines and smelters; they are building exchange-recognised refined metal capacity that can serve Chinese industrial and financial markets.

The Metalnomist Commentary

SHFE approval of Indonesian nickel cathode brands confirms that Indonesia is moving deeper into Class I nickel, not only bulk stainless and battery intermediates. The strategic issue now is whether this new exchange-deliverable capacity strengthens market liquidity or adds further pressure to an already oversupplied refined nickel market.

Cleveland-Cliffs Rare Earths Plan Stalls on US Refining Bottleneck

Cleveland-Cliffs

Cleveland-Cliffs rare earths ambitions have been put on hold as limited US refining capacity weakens the economics of upstream exploration. The integrated steelmaker said it has halted plans to shift part of its mining strategy toward rare earths because domestic processing infrastructure remains too limited.

The decision highlights a central weakness in the US critical minerals strategy. Finding rare earth mineralisation is only the first step. Without refining, separation and downstream conversion capacity, upstream resources cannot easily become commercial supply.

Cleveland-Cliffs rare earths plans had gained attention because the company owns mining assets and tailings basins in traditional US iron ore regions. Geological surveys last year identified signs of rare earth mineralisation at two company-owned sites, one in Michigan’s Upper Peninsula and another in Minnesota.

However, chief executive Lourenco Goncalves said the economics depend on domestic refining capability. He said that infrastructure remains extremely limited in the US, making rare earth development difficult without external processing support.

US Refining Gap Limits Critical Minerals Development

Cleveland-Cliffs is not planning to build rare earth refining capacity on its own. The company said the process is capital-intensive, and the investment case remains weak without a broader domestic refining ecosystem.

This is strategically important because rare earth supply chains are highly segmented. Mining, beneficiation, separation, refining, metal conversion, alloying and magnet manufacturing all require different capabilities.

The US has focused heavily on rare earth resource development, but refining and separation remain among the most difficult parts of the value chain. These stages require chemical processing expertise, environmental controls, long permitting timelines and large capital commitments.

Cleveland-Cliffs rare earths development therefore depends on infrastructure beyond its own mining footprint. The company said it remains positioned to enter the market when viable domestic refining capacity becomes available, whether through government-backed projects or third-party investments.

This approach is cautious but realistic. A steelmaker with mineral resources may identify rare earth potential in ore bodies or tailings, but it cannot easily monetise those materials without a customer-ready processing route.

The decision also shows why tailings-based critical minerals projects are harder than they appear. Tailings may contain valuable elements, but recovery depends on grade, mineralogy, processing cost, environmental permitting and access to refining capacity.

For the US government, the message is clear. Critical mineral independence cannot rely only on resource mapping. It needs industrial processing capacity that gives miners and materials companies a practical route to market.

Rare Earth Opportunity Remains Conditional on Policy and Processing

Cleveland-Cliffs had explored rare earths as part of a broader response to rising US-China trade tensions and Washington’s push for critical material independence. The company’s historic identity as an ore producer made the idea strategically plausible.

Cliffs originally operated as an iron ore producer before becoming a major US steelmaker. It expanded downstream in 2020 by acquiring AK Steel and most of ArcelorMittal’s US operations.

That history gives the company mining expertise, industrial assets and a domestic manufacturing base. But rare earths are not the same as iron ore or steel. They require a much more specialised chemical and metallurgical value chain.

Rare earth elements are key feedstocks for electric vehicle motors, semiconductors, wind power, solar technologies, defence systems and advanced electronics. This makes them strategically valuable, but also politically sensitive.

The US wants to reduce dependence on China, which dominates many rare earth processing and magnet supply chains. But companies still need bankable refining options before upstream projects can move forward.

Cleveland-Cliffs rare earths strategy may therefore return if domestic refining capacity expands. Government-backed projects, third-party processors or integrated separation facilities could change the economics.

Until then, the company appears unwilling to commit capital to a market where upstream potential is disconnected from downstream processing. That reflects discipline, but also exposes a national supply-chain gap.

The broader implication is that critical minerals policy must connect every stage of the chain. Exploration without refining creates stranded potential. Refining without feedstock creates underused capacity. Magnet and electronics supply chains need both.

The Metalnomist Commentary

Cleveland-Cliffs’ decision shows that the US rare earth challenge is not only geological. The real bottleneck is processing infrastructure, and without it, even strategically located resources can remain commercially stranded.

Brazil Mineral Exports Rise as Imports Climb on Fertilizer Feedstock Demand

Brazil Mining

Brazil mineral exports increased in the first quarter of 2026, while imports rose more sharply as the country continued to rely on overseas supply for fertilizer-related minerals. National mining institute Ibram reported that mineral exports rose by nearly 1% from a year earlier, while imports increased by 15%.

Brazil mineral exports reached around 87.9mn t in the quarter, with China remaining the main destination. Iron ore accounted for nearly 54% of total shipments, reinforcing its central role in Brazil’s mining trade balance.

Brazil mineral exports continued to support a large sectoral surplus. The mineral trade surplus reached around $9.3bn in the first quarter, up 20% from the same period in 2025, supported by exports of iron ore, gold and copper.

Iron Ore, Gold and Copper Anchor Brazil’s Mining Surplus

Iron ore remained Brazil’s dominant mineral export in the first quarter. This reflects the country’s established role as one of the world’s key suppliers to steelmaking markets, especially China.

Gold and copper also contributed to export value. These metals are strategically important because gold supports financial and industrial demand, while copper is increasingly tied to grids, electrification, construction and manufacturing.

The rise in the mining trade surplus shows that Brazil’s mineral sector remains a strong foreign-exchange earner. Even modest export volume growth can generate a larger surplus when high-value commodities and stronger pricing conditions support trade values.

China’s role remains especially important. Brazilian iron ore exports depend heavily on Chinese steel demand, infrastructure activity and industrial production. Any slowdown in China can therefore affect Brazil’s mining revenue outlook.

Imports Highlight Fertilizer and Industrial Supply Dependence

Brazil imported 10mn t of mineral products in the first quarter. The US was the largest supplier, accounting for 19% of mineral imports, while Colombia and Canada each supplied about 13%.

Potassium, coal and sulphur led import flows. These materials are important for fertilizer supply and industrial activity, showing that Brazil’s mineral strength does not remove its dependence on imported inputs.

Potassium is especially important for Brazil’s agricultural sector. The country is a major global food producer, but fertilizer supply remains exposed to international trade flows and geopolitical risk.

Sulphur imports also matter because sulphur is used to produce sulphuric acid, a critical input for fertilizers, chemical processing and some mining operations. Coal imports continue to support industrial and energy-related demand.

Ibram projects mining sector investment to rise by 12.5% by 2030, reaching $76.9bn. Critical minerals could account for almost 28% of that total, or $21.3bn.

This investment outlook points to a broader shift in Brazil’s mining strategy. Iron ore will remain the export backbone, but copper, nickel, lithium, rare earths, graphite and other critical minerals could gain strategic importance as global supply chains diversify.

The Metalnomist Commentary

Brazil’s first-quarter trade data show a mining sector that remains strong in exports but still dependent on imported fertilizer and industrial inputs. The next opportunity lies in converting critical minerals investment into higher-value production beyond the country’s traditional iron ore base.

Indonesia HPAL Nickel Ore Costs Rise as New HPM Formula Hits Limonite Feedstock

Nickel ore

Indonesia HPAL nickel ore costs are set to rise sharply after the government’s revised mineral benchmark price lifted the mandated price floor for limonite ore. The new HPM formula is expected to increase limonite ore costs by at least 50%, adding immediate margin pressure to mixed hydroxide precipitate producers.

The revised HPM for limonite ore containing 1.2% nickel, 0.1% cobalt and 2% chromium is calculated at $45.24/wmt under the updated Harga Mineral Acuan. That is around 50% higher than early April transacted prices of about $30/wmt for 1.2% limonite ore.

Indonesia HPAL nickel ore costs are also far above the previous benchmark level. Under the old formula, the HPM for similar ore was only $17.17/wmt, meaning the new benchmark is nearly three times higher.

The change matters because HPAL operations rely on limonite ore as feedstock to produce MHP, which is used in battery-grade nickel and cobalt supply chains. A higher government-mandated ore floor will raise raw material costs, increase royalty payments and pressure margins across Indonesia’s battery nickel industry.

Limonite Ore Repricing Raises MHP Cost Pressure

The new HPM framework has the strongest impact on limonite ore because this material typically trades closer to benchmark values than saprolite ore. HPAL producers therefore face a more direct cost increase than rotary kiln-electric furnace operators.

MHP producers will now have to absorb higher ore purchase costs and higher royalties. Since royalties are linked to official valuation, the total cost increase could exceed the headline 50% rise in limonite ore pricing.

The revised formula also changes how Indonesia captures ore value. It includes cobalt, iron and chromium in nickel ore valuation, making these contained elements taxable. This is especially important for limonite ore because cobalt content adds value to HPAL feedstock.

The correction factor for cobalt is set at 30% when ore contains at least 0.05% cobalt. Iron carries a 30% correction factor when content is 35% or lower, while chromium carries a 10% correction factor.

This means Indonesia is no longer valuing nickel ore mainly by nickel grade. The government is moving toward a broader contained-metal pricing model, capturing more value from battery-related by-products and ore chemistry.

For MHP producers, this creates a structural cost problem. HPAL projects were built around access to Indonesian limonite ore, sulphuric acid and integrated processing infrastructure. If ore costs rise by more than a third to half, the cost floor for MHP production moves higher.

This could affect downstream nickel sulphate and cathode material economics. Producers with stronger integration, lower acid costs and better logistics will be better positioned. Higher-cost operators may face squeezed margins if MHP prices do not rise enough to offset the new ore benchmark.

The change also comes as Indonesia tightens wider nickel policy. Mining quota uncertainty, export tax discussions and stricter pricing formulas all point to a broader state strategy of capturing more mineral value before material moves downstream.

Sulphuric Acid Tightness Adds a Second Cost Shock

Indonesia HPAL nickel ore costs are rising at the same time as sulphuric acid prices surge. This creates a double pressure point for MHP producers.

HPAL operations require large volumes of sulphuric acid to leach nickel and cobalt from limonite ore. Any disruption in sulphur or acid supply directly affects processing costs and production reliability.

The US-Iran conflict has stranded several sulphur cargoes bound for Indonesian HPAL producers, preventing them from transiting the Strait of Hormuz. As a result, producers have shifted toward buying sulphuric acid directly.

That market was already tight because of limited copper concentrate availability. Sulphuric acid supply is expected to tighten further as China suspends exports from May.

Southeast Asian sulphuric acid prices have risen sharply. Prices reached $277.50/t cfr on 9 April, up 71% from $162.50/t before the conflict.

This is a major issue for Indonesian HPAL plants. Higher limonite ore costs increase feedstock expenses, while higher sulphuric acid prices increase processing costs. Together, they raise the full cost of producing MHP and weaken the advantage of low-cost Indonesian battery nickel.

Saprolite ore faces less immediate disruption. Saprolite is mainly used in RKEF operations to produce nickel pig iron and ferronickel. Although the new HPM for typical saprolite ore containing 1.6% nickel, 18% iron and 2% chromium rises to $52.90/wmt from $29.94/wmt, it remains below early April transacted prices of about $70/wmt.

This means RKEF producers may see limited immediate transaction impact because market prices are already above the benchmark. HPAL producers, by contrast, face a direct reset of the cost floor.

The difference could reshape relative economics between Indonesia’s stainless-linked and battery-linked nickel chains. NPI producers remain supported by high saprolite prices, while HPAL producers now face rising limonite, royalty and acid costs.

For the global battery supply chain, the key risk is that Indonesia’s MHP cost curve shifts upward. That could support nickel sulphate prices over time, especially if acid tightness persists or HPM-linked royalty costs remain elevated.

For Indonesia, the policy strengthens resource rent capture. The government is recognising that limonite ore contains not only nickel but also cobalt and other valuable elements. This gives Jakarta a stronger fiscal claim over battery material feedstock.

However, the policy also increases operating uncertainty. HPAL investors need predictable ore pricing, acid availability and tax treatment to justify large-scale expansion. A sharp change in HPM could force producers to revisit cost assumptions, procurement strategies and product pricing.

The Metalnomist Commentary

Indonesia’s new HPM formula marks a turning point for HPAL economics. The country is capturing more value from limonite ore, but the combined shock of higher ore prices, royalties and sulphuric acid costs could reset the cost floor for global MHP supply.

NPI–Class I Nickel Spread Narrows as Metal Oversupply Pressures Prices

Nickel cathode

NPI–class I nickel spread narrowed sharply in March as persistent oversupply in the class I nickel market pushed metal prices lower, while nickel pig iron prices stayed supported by elevated production costs. The average spread fell to $2,975/t in March, down from the 2025 annual average of $3,696/t.

The narrower NPI–class I nickel spread shows how differently the two nickel markets are behaving. Class I nickel remains under pressure from high exchange stocks and weak absorption from battery and alloy users. NPI, by contrast, is being held up by Indonesian ore costs and a firmer production cost floor.

The current spread also discourages additional class I output from NPI conversion. Estimated conversion costs from NPI to class I nickel remain around $4,000/t, meaning producers using NPI as feedstock would face negative margins at current price levels.

This creates an important signal for the nickel supply chain. Oversupply is still weighing on refined metal, but high feedstock and processing costs are preventing prices from falling evenly across all nickel products.

Class I Nickel Oversupply Keeps Metal Prices Under Pressure

Class I nickel oversupply remains the main reason behind the compressed spread. London Metal Exchange nickel stocks reached 289,506t on 26 February, the highest level since May 2018.

Ample exchange inventory has pressured class I nickel prices and opened an import arbitrage window into China. China’s nickel imports rose by 18% in January-February as lower overseas prices made imported metal more attractive.

However, end-user demand has not been strong enough to absorb the surplus. Battery and alloy-sector consumption remained insufficient to clear the additional metal units, pushing Shanghai Futures Exchange nickel stocks higher.

SHFE nickel inventories rose to 65,764t on 10 April from 45,544t on 9 January. This inventory build shows that imports and domestic availability are running ahead of immediate consumption.

The oversupply problem is structural in the near term. New class I capacity has continued to emerge, while demand from stainless steel, batteries and specialty alloys has not grown fast enough to rebalance the market.

The NPI conversion route is therefore unattractive. When the NPI–class I nickel spread sits below conversion cost, producers have little incentive to turn NPI into refined metal. This helps prevent additional supply from that route, but it does not immediately remove existing class I oversupply.

NPI prices have been more resilient because they are tied closely to Indonesian ore economics. Indonesian nickel ore prices remain elevated and continue to trade above the government-mandated price floor.

Concerns over tight ore availability have supported feedstock values. This has limited NPI producers’ willingness to cut prices, even though stainless steel demand remains only average.

That cost floor is important. NPI is not rising because downstream demand is exceptionally strong. It is holding because ore, mining quotas and Indonesian pricing policy are preventing a deeper fall.

The result is a distorted market structure. Class I nickel is being pulled down by inventory pressure, while NPI is being supported by feedstock costs. This explains why the spread has narrowed despite weak overall nickel sentiment.

MHP and HPAL Costs Could Rebuild the Spread Over Time

Mixed hydroxide precipitate is becoming the more important cost driver for future class I nickel production. Much of the newly added class I capacity relies on MHP feedstock rather than NPI.

Integrated producers with their own Indonesian MHP capacity have a cost advantage. Their MHP production costs are estimated at around $13,000/t in nickel metal equivalent, with conversion costs from MHP to metal at roughly $3,000/t.

This places the total cost of class I production through the MHP route at about $16,000/t. That cost base can still support production for integrated operators, but it leaves less room for producers relying on third-party MHP.

The market problem is that MHP supply is not sufficient to meet all feedstock requirements for new class I capacity. This creates competition for MHP units and limits how much low-cost refined nickel can be produced through this route.

Cost pressure is also rising across HPAL operations. Middle East tensions have tightened sulphur availability and lifted sulphur prices, which directly affects MHP producers that rely on sulphuric acid-intensive processing.

Sulphur and sulphuric acid are central to HPAL economics. Any disruption to sulphur flows can raise operating costs, reduce margins or force producers to curtail output if acid availability becomes constrained.

Indonesia’s revised nickel ore pricing formula adds another layer of pressure. The new formula is expected to have a greater impact on ore consumed by HPAL projects than on ore used by rotary kiln electric furnace operations.

This is because HPAL ore often trades closer to official pricing levels, while RKEF ore used for NPI already trades at premiums well above the benchmark. As a result, HPAL producers may feel the revised HPM framework more directly.

Higher ore prices and higher taxes could lift MHP production costs. That would eventually raise the cost floor for class I nickel produced through the MHP route, especially for integrated producers that had previously enjoyed lower feedstock costs.

This cost inflation may support class I nickel prices over time. While current oversupply is weighing on metal values, producers cannot keep adding supply indefinitely if feedstock and conversion costs rise.

NPI prices are also likely to remain anchored by costs. Indonesian ore tightness, quota uncertainty and pricing reforms should continue to support NPI even if stainless steel demand stays moderate.

As MHP costs rise and NPI prices remain cost-supported, the NPI–class I nickel spread may widen back toward the $3,500-4,000/t range over time. That would restore a more normal relationship between feedstock products and refined metal.

However, the timing depends on inventory absorption. Class I nickel prices will struggle to recover strongly until exchange stocks stop rising and downstream demand improves.

For battery supply chains, the key issue is cost pass-through. If MHP and HPAL costs rise while class I prices remain weak, margins across nickel sulphate and cathode material chains could tighten.

For stainless steel producers, NPI resilience means raw material costs may remain sticky even without strong demand. This could limit margin recovery if finished stainless prices do not rise in parallel.

The nickel market is therefore entering a complex adjustment phase. Oversupply is pushing refined metal lower, while policy, ore availability, sulphur costs and HPAL economics are raising the cost floor beneath intermediate products.

The Metalnomist Commentary

The narrowing NPI–class I nickel spread is not a sign of healthy convergence. It reflects class I oversupply on one side and cost-protected NPI on the other. The next shift will likely come from rising HPAL and MHP costs, not from a sudden recovery in nickel demand.