The World's Largest Nickel Producer Has Decided To Significantly Increase Capacity

While demon nickel's frenzy was temporarily halted when the LME suspended trading in nickel futures, the impact of lunni hitting $100,000 a tonne was profound as Indonesia, the world's largest nickel producer, decided to ramp up production of the metal.

Indonesia plans to increase its nickel production by 393,000 to 400,000 tonnes this year, bringing total production to 1.4 million tonnes, and add another 500,000 tonnes of annual capacity next year, Luhut Panjaitan, coordinating minister for investment and maritime affairs, said in an interview on Wednesday.

"We believe that with this additional capacity, we can more than offset any loss of supply from Russia or elsewhere."

Meanwhile, Indonesia will monitor "unprecedented" market conditions to decide whether to impose export duties on nickel iron and pig iron containing nickel. "We need to be mindful of the impact on consumers," Panjaitan said. "We don't want to kill the ev battery industry, and we don't want nickel prices to derail our goal of producing lithium batteries by early 2024."

Septian HarioSeto, Indonesia's deputy minister of Marine and Investment Affairs, said on January 22 that the government might impose a tax on exports of nickel iron and pig iron containing nickel from this year. If the nickel price is above $15,000 / ton, a 2% tax may be levied, and the tax increases with the nickel price. The main purpose of the tax is to promote investment in the downstream nickel industry.