The battle lines of international nickel

Indonesia, now the world’s largest nickel producer, says it is in discussions with multiple other major producers to create an OPEC-style cartel to control prices of the essential battery metal. 

President Joko Widodo announced a market-disrupting plan to create a new international battery metal cartel to world leaders at the G7 Hiroshima Summit. 

“It is time to establish an OPEC-like group for other products such as nickel and palm oil,” the Indonesian President stated. 

“I hope G7 countries can become a partner in these industrial downstream policies.” 

The plan seemed to have gained little traction but was thrust back into the spotlight after Indonesia Investment Minister Bahlil Lahadalia said that talks were now underway with multiple countries. 

“There are three countries whom we already have been intensely communicating with,” Mr Lahadalia said. 

While refusing to name names, he claimed the approached parties agreed it was a great idea in principle but still needed to hammer out details of the proposal. 

Given that OPEC countries control their reserves through nationalised organisations and not the individual companies contributing the bulk of Western output, it makes a cartel-style operation far less achievable. 

“In OPEC, oil production is essentially a ‘country’-run business. Production can be increased or decreased by a relatively small group to influence the global situation,” Wood Mackenzie analyst Andrew Mitchell said. 

“In nickel, it’s more disparate – although Indonesia obviously controls a lot of output, there are large producers elsewhere.” 

And Benchmark Mineral Intelligence analyst Greg Miller said that the lines drawn between national alliances would further impede an OPEC-like operation. 

“Geopolitics is starting to play an outsized role in the development of the battery supply chain, with Indonesia largely falling into the Chinese sphere and Canada in the U.S,” Mr Miller said. 

“I sense geopolitical considerations would override the influence of any OPEC-style organisation.” 

But one name stands out on the list of significant producers as a potential nickel ally for Indonesia. 

Indonesian dominance in the sector is followed by the US-aligned Philippines, with French-owned New Caledonia, Australia, Canada, and China all in the mix as significant producers. 

But at number three, even with falling output, comes Russia. 

The under-siege power’s ruling party submitted legislation for approval by the lower house of parliament on nationalising assets of foreign companies, which exited in response to the invasion of Ukraine. 

Norilsk Nickel President Vladimir Potanin has previously quashed the idea, saying that confiscating assets from companies that have left Russia would have dire long-term consequences. 

“We should not try to ‘slam the door’ but endeavour to preserve Russia’s economic position in those markets which we spent so long cultivating,” Mr Potanin said. 

“It would take us back 100 years to 1917, and the consequences, a global lack of confidence in Russia from investors, we would feel for many decades.” 

Norilsk, the world’s largest producer of palladium and refined nickel, was the first company allowed to keep its foreign listings through the war, and the Russian Government has previously shown reluctance to get involved with past conflicts at the company. 

 But there are signs of a shift to Asia for Norilsk, with Russia’s biggest miner now notably earning virtually half its revenue in Asia after declining European sales. 

Chinese nickel output is flagging, having slumped near twenty-year lows, and the BRICS nations are snapping up gold reserves in the wake of sanctions and are even deliberating a new global currency backed by the gold standard. 

And as electrification continues, companies may choose between environmentally cleaner and ESG-approved Western production or the allure of a cheaper but dirtier product. 

Using acid under intense heat and pressure conditions to separate nickel has long been considered too damaging by most producers. Still, over $1 billion has been invested in an Indonesian facility to use the technology, bordered by the rainforest and blue oceans. 

The process makes it especially dangerous to transport and store the hazardous waste product it creates. It remains untested in Indonesia, where the high frequency of earthquakes, rainfall and landslides makes logistics particularly dangerous. 

Andrew Forrest has made considerable investments in the future of nickel, and through Wyloo parent company Tattarang has acquired Mincor Resources as a critical objective to capitalise on nickel sulphide production from Kambalda and provide the market with a choice. 

“Wyloo has targeted nickel sulphides as they are the greenest and cheapest option for battery manufacturing: they have the best economics, can be processed into battery grade nickel with the lowest environmental footprint and are fully recyclable,” Mr Forrest said. 

“We are going to give the market a choice between clean nickel and dirty nickel.” 

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