Indonesia’s policies will drive global nickel dynamics

Significance

The nickel price has surged by more than 50% this year to the highest since 2014. Supply concerns triggered the rise following the collapse of Brazil’s Brumadinho iron ore tailings dam in January, killing at least 248 people. Plunging inventories, floods in Indonesia and closure of Vale’s Onca Puma operation in Brazil have driven the price higher.

Impacts

• Inventories are low and China’s port stockpiles cover just five months' contained nickel consumption; this will support the price globally.
• In August, waste from a nickel plant spilled in Papua New Guinea; environmental fears will rise worldwide and could raise costs for firms.
• Indonesia is allowing miners to export nickel ore, but a blanket ban on ore exports from January could hit world supply in 2020.
• Russia’s Nornickel is closing a smelter on environmental grounds; permafrost melt may be a greater threat to longer-term production.