Indonesia’s Nickel Production Growth Faces Supply and Environmental Hurdles

Ambitious Expansion Plans in Jeopardy

Indonesia is set to significantly increase its nickel production over the next few years by enhancing its high-pressure acid-leaching (HPAL) capabilities. However, this ambitious plan encounters major obstacles, particularly a looming shortage of sulphuric acid and the complex task of managing tailings waste. Despite these challenges, forecasts indicate a continued rise in nickel output, even as the global market braces for a potential surplus.

Sulphuric Acid Shortages and Resource Concerns

The HPAL process is crucial for extracting nickel and cobalt from ore, relying heavily on sulphuric acid to produce mixed hydroxide precipitate (MHP). This year, Indonesia expects to produce between 325,000 to 345,000 tons of MHP, a notable increase from 269,000 tons in 2023. With several new projects in the pipeline, production could soar to 800,000-900,000 tons by 2026, as highlighted by Deputy Minister Septian Hario Seto during a recent industry event.

Sustainability Issues with Ore Supply

As MHP production ramps up, the demand for nickel ore and sulphuric acid intensifies, raising concerns about the sustainability of limonite ore supplies. Currently, Indonesia’s four operational HPAL facilities primarily import sulphuric acid from China and South Korea. However, increasing costs have prompted some companies to explore cheaper sulphur alternatives. New smelters are expected to contribute an additional 3 million tons of acid capacity by 2025, which may help ease supply constraints.

Environmental Scrutiny on Tailings Disposal

The disposal of tailings waste has gained scrutiny due to heightened environmental, social, and governance (ESG) standards. The HPAL process generates substantial waste, estimated at 1.4-1.6 tons of tailings for every ton of nickel produced. Various disposal methods, including tailings dams and deep sea disposal, each pose risks. Dry stacking is viewed as the more sustainable option, yet Indonesia’s wet climate and seismic activity present challenges for its implementation.

Critical Need for Sustainable Practices

To successfully expand its HPAL production, Indonesia must secure a consistent supply of sulphuric acid and adopt effective tailings management strategies. Addressing these issues is vital for sustaining growth in the country’s nickel production while adhering to stricter environmental standards.