As one of world’s leading nickel producing regions, Southeast Asia is looking forward to strong growth for the base metal that has been identified as being significant in the further development of new energy solutions and electric vehicles.
The majority of the world’s largest nickel producers are in Southeast Asia. Indonesia has been the world’s largest, with an annual production of 400,000t (about 27% of the global nickel supply, followed by the Philippines with 347,000t and New Caledonia, with 210,000t.
Leading global resource sector research firm, Wood Mackenzie, believes 2021 will be a year of recovery for the nickel sector and that seems to be reflected on what has happening on the ground in Southeast Asia.
In a recently published global nickel short-term outlook report, Wood Mackenzie suggested that strong percentage growth in nickel demand coupled with increasing optimism spurred by the roll out of COVID vaccines and the easing of restrictions, and resurgent fervour over the future of electrification, will keep nickel prices rising.
According to Wood Mackenzie, the nickel story is really all about Indonesia: its export ban on nickel ore is expected to reduce Chinese nickel pig iron (NPI) production by almost 40% in 2021. But this should be more than offset by domestic supply coming online.
At the same time Indonesia is also embarking on a journey to become a major hub in the battery supply chain.
Politically, the Indonesian nickel picture is certainly looking strong. Indonesian state-controlled miner Aneka Tambang Tbk is targeting a growth in ferronickel production and sales volumes to 26,000 tonnes of nickel. The company’s unaudited ferronickel production and sales in 2020 reached 25,970 TNi and 26,163 TNi.
The company said the ferronickel production target is in line with ANTAM’s strategies to increase the production optimisation of the Pomalaa ferronickel plant in Southeast Sulawesi.
On nickel ore, ANTAM is targeting a very significant increase in nickel ore production of 8.44 million wet metric tons (wmt) in 2021, an increase of 77% compared to unaudited nickel ore production in 2020 which reached 4.76 million wmt.
The increasing nickel ore production target will be used as ore feed for ANTAM’s ferronickel plant as well as being sold to domestic market customer.
Meanwhile, the nickel ore sales target in 2021 amounts to 6.71 million wmt, an increase of 104% compared with nickel ore sales in 2020 which reached 3.30 million wmt. The increasing nickel ore sales target is in line with the positive nickel outlook demand from the domestic market.
Nickel’s fortunes are also on the rise in The Philippines.
According to government figures, the metals sector in the Philippines appears to have turned a corner with the country’s metallic mineral production value ending the year on a positive note with a 1.13% gain from PhP130.74B in 2019 to PhP132.21B in 2020, a PhP1.47B increase.
Nickel ore, together with the nickel by-products – mixed nickel-cobalt sulphide and scandium oxalate – ruled the production scene with PhP68.48B or 51.80%. Copper, on the other hand, was third accounting for PhP14.88B or 11.25%.
The Philippines Mining and Geoscience Bureau (MGB) said the primary ingredient for the country’s base metals upswing was direct shipping nickel ore. Production volume and value went up by 3% and 21%, respectively from 323,325 metric tons valued at PhP31.65B to 333,962 metric tons valued at PhP38.39B year on year.
Notably, 37%, or 11 Philippine nickel mining projects, reported zero production of which eight were located in the Dinagat Islands, and one each from Isabela, Zambales, and Davao Oriental. The zero production was attributed to a care and maintenance programme and suspension by the government.
Despite the current situation, the commodity had a good run due to favourable metal price and this was credited to the pandemic-induced supply disruptions, robust demand from China’s stainless steel industry, and possible lower supply due to Indonesia’s export ban on nickel ore.
The MGB said tight supply coupled with strong demand will naturally push prices to better levels. Next to Indonesia, the Philippines is the largest supplier of nickel ore to China. China was still the country’s top export market for its nickel ore followed by Japan in 2020.
Mixed nickel and cobalt sulphide recorded lower output and value from 51,144 metric tons with an estimated value of PhP31.70B to 49,647 metric tons with an estimated value of PhP29.76B, lower by 1,497 metric tons and PhP1.94B year on year.
One of the up-and-coming nickel players in the Southeast Asian region, Vietnam-focused Blackstone Minerals (ASX: BSX), believes there is a huge future for the base metal – particularly via Lithium-ion battery growth.
The company recently unveiled a strategic expansion into downstream processing in Vietnam, where it operates the exciting Ta Khoa Nickel-Cobalt-Copper project.
Blackstone’s Managing Director, Scott Williamson, said the updated timing on a downstream Pre-Feasibility Study (PFS) reflects the company’s ambition to capture as much value as possible in a rapidly growing lithium-ion battery industry.
“We believe we are at the forefront of a once-in-a-generation opportunity and the company is positioning by increasing the scale of its downstream refining capacity.”
Commodity trends to watch out for
As for other key base metals, copper is presenting a mixed picture in the region.
In its recent half year commodity outlook, BHP said it expected the demand–supply balance to remain relatively tight in both copper and iron ore.
In the medium and long term, on the demand side, BHP said it continues to see emerging Asia as an opportunity rich region. Later stage urbanisation and industrialisation in China, early–stage urbanisation in India and ASEAN and the multi-decadal impact of China’s Belt and Road initiative are all expected to provide additional demand for its products.
In the Philippines, the MGB has noted a significant downturn in the country’s copper production.
The MGB reported that mine output of gold, silver, and copper continued to be on the downswing with the absence of Didipio Gold-Copper Project of OceanaGold (Phils) Inc. (OGPI) located in Nueva Vizcaya.
On copper production, of the three projects currently in operation, Carmen Copper Corporation in Cebu dominated with almost 80% or 48,576 metric tons valued at PhP11.19 billion while in far second was Philex Mining Corporation with 11,964 metric tons valued at PhP3.65 billion.
Total production volume and value were lacklustre at 18% and 19%, respectively from 71,892 metric tons valued at PhP18.46 billion to 60,856 metric tons valued at PhP14.88 billion. The third producer was Lepanto Consolidated Mining Corporation (Quartz-Pyrite-Gold Project) with 316 metric tons valued at PhP0.42 billion.
With base metals markets still jumpy as commodity prices rebound from the COVID-19 turmoil of 2020, Southeast Asia will remain a key region for meeting demand for critical markets such as China.