Top executives at several Chinese nickel producers plan to meet as early as Tuesday to discuss coordinated output cuts at their battery material plants in Indonesia, according to people familiar with the matter. Companies including Tsingshan Holding Group Co., GEM Co., Lygend Resources & Technology Co., and Zhejiang Huayou Cobalt Co. aim to finalize the scale of cuts needed as weak metals prices hamper profitability at their high-pressure acid leaching (HPAL) operations. This follows an August meeting that failed to produce an agreement.
The HPAL process produces mixed hydroxide precipitate (MHP), which contains nickel and cobalt for battery-grade materials. The companies are likely to discuss reducing output based on existing run rates, though details remain fluid and there is no guarantee of an accord. Chinese firms have heavily invested in Indonesia’s nickel industry, which accounts for over half the world’s output, but conditions have worsened this year.
The government has tightened mining quotas and hiked ore prices, squeezing margins. The Iran war has increased sulfur costs—a key HPAL element—while water shortages have disrupted operations. MHP is priced against nickel and cobalt benchmarks, both of which have fallen.
Nickel on the London Metal Exchange has declined around 20% from its May peak, with another steep drop since August, while cobalt has hit a one-year low.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing