Indonesia’s Ministry of Energy and Mineral Resources (ESDM) has revised its nickel ore benchmark price (HPM) formula. The new rule nearly halves official values for low-grade limonite ore. This change significantly shifts input costs across the battery materials value chain.
Key Revisions to Correction Factors
The decree adjusts corrective factors for nickel and cobalt in lower-grade ores. Ore with 1.2% nickel now receives a 14% corrective factor. This is down sharply from 26% under the prior methodology. Below 1.2% nickel, the factor drops by 1 percentage point for every 0.1% reduction in grade.
Cobalt valuations have also changed. Ore grading above 1.2% nickel retains a 30% cobalt factor. However, ore at or below 1.2% nickel sees its cobalt factor cut from 30% to 17%. Higher-grade saprolite ore remains unaffected by these regulatory changes.
Strategic Relief for HPAL Feedstock and Refiners
The structural adjustment targets feedstock used by High-Pressure Acid Leaching (HPAL) plants. These facilities process lower-grade limonite ore into battery-grade intermediates.
For a typical limonite ore grading 1.1% nickel and 0.1% cobalt, the calculated HPM benchmark falls to $22.17 per wet metric tonne (wmt). That is down from $40.95/wmt under the previous mechanism. Lowering the benchmark price reduces the base calculation for mining royalties and taxes. This change directly lowers production costs for HPAL refiners while exerting downward pressure on downstream nickel sulphate and Class 1 metal.
Market Impact
○ Impacted Metals: Limonite nickel ore, saprolite nickel ore, nickel sulphate, Class 1 nickel metal, cobalt
○ Direction: Bearish
○ Time Horizon: Near-term
○ Affected Industries: Battery Materials, Electric Vehicles, Nickel Smelting, HPAL Refining, Energy Transition
○ Related Price Reports: Nickel Alloy Weekly Price Report, Cobalt Alloy Weekly Price Report
○ Watch Item: Track London Metal Exchange nickel cash prices and Indonesian HPAL plant margins following the reduction in benchmark feedstock costs.
SuperMetalPrice Commentary:
By significantly lowering the benchmark price calculation for 1.2% nickel ore, ESDM is directly reducing government royalty burdens for local miners while handing HPAL operators a crucial margin buffer. This policy pivot reinforces Indonesia’s dominance in low-cost nickel intermediate production, likely keeping persistent pressure on global Class 1 and nickel sulphate market pricing.
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