Nickel processing at IMIP, Sulawesi, Indonesia. Photo by Rezki Alhidayat at Shuttlestock
This insight summarises CRU’s key takeaways from a recent research trip to nickel and stainless steel assets in Indonesia. In late March, CRU was invited to visit the Indonesia Morowali Industrial Park (IMIP) located in Central Sulawesi. The trip was organised by Australian listed Nickel Industries, which started operating its Hengjaya nickel mine, located next to IMIP, in 2009. CRU was the only commodity market research company on this trip, while other attendees included representatives from investment banks, investment funds, and various media organisations.
During the visit, we had the opportunity to see the entire nickel supply chain, from mining to smelting of nickel pig iron (NPI) and matte, to production of stainless steel and nickel cathode; as well as production of mixed hydroxide precipitate (MHP) via the high-pressure acid leach (HPAL) process. The assets we visited included the Hengjaya nickel mine, Oracle Nickel Industry’s (ONI) four rotary kiln electric furnace (RKEF) lines, PT Huayue Nickel and Cobalt’s (HNC) HPAL operation, CNGR Dingxing cathode plant, and Guangqing Nickel Corporations Indonesia (GCNS) stainless steel mill. In addition, we toured the facilities of two ports.
IMIP overview: a maturing giant
IMIP has been operating continuously since the first phase of construction was completed in 2013. At its inception, the development represented the first JV between China’s Tsingshan Group and a large Indonesian miner, Bintang Delapan Group. The park now operates with 18 different JV partners and has over 100,000 workers, with the majority being native Indonesians, excluding 3,000 of Tsingshan’s management and technical staff from China. By leveraging abundant ore resources, Chinese investment and knowhow, IMIP has become the largest nickel industrial park in the world. After only one decade of continuous development, IMIP has an annual nameplate production capacity of 4.2 Mt/y of NPI, 4 Mt/y of stainless steel billet, 7 Mt/y of carbon steel and 90 kt/y of MHP.
While the site showcases the entire nickel supply chain from upstream mining to downstream stainless steel production, under Tsingshan’s guidance, many other projects have also been constructed within IMIP. These include production facilities for other raw materials including ferrochrome, ferrosilicon, electrolytic manganese, and sulfuric acid. In addition, IMIP’s infrastructure facilities now include nine power plants, two ports, a water treatment plant, an oxygen station, and an airport for fly-in fly-out workers, and a hotel for the many officials and management that regularly visit the operations.
The takeaways below follow the nickel supply chain from mine, to NPI, stainless steel and cathode plant, and then on to HPAL operations and projects.
Mining permits delays impact IMIP ore supply
We understand that there were delays in ore sales into the IMIP in early 2024 as the Ministry of Energy and Mineral
Resources (ESDM) struggled to keep up with processing the number of mining permits known as RKAB (Rencana Kerja dan Anggaran Biaya) that required renewal. Historically, permits have been renewed on an annual basis, but this has now changed to three years to prevent delays occurring every year.
Nickel Industries’ Hengjaya mine was directly impacted by this situation and was unable to deliver ore to its RKEF facilities within IMIP during January and most of February. The company was, however, able to continue mining and stockpile ore on-site until its permit was issued by ESDM on 20 February. This situation had a wider impact on IMIP, where the saprolite ore stockpile was only meeting around three months of supply, which is around half the volume usually held on-site, therefore indicating that this issue had impacted many of the miners supplying ore to the industrial park.
As of mid-March and according to the latest update from ESDM, permits representing a total of 152.6 Mt of nickel ore have been approved for 2024, and it is expected that more will be issued throughout the year.
Hengjaya’s mine output up by 36% y/y in 2024
The Hengjaya mine is located 12 km from IMIP and in 2023, nickel ore production totalled 13.4 Mt, of which 9.6 Mt was limonite ore and 3.8 Mt saprolite ore. According to Nickel Industries, mine production in 2024 is expected to reach 18.3 Mt, with 12.1 Mt of limonite ore and 6.2 Mt of saprolite ore. This represents an increase of 36% compared with 2023.
Saprolite ore from the Hengjaya mine is transported in trucks via a new $15 M haulage road directly to Nickel Industries’ RKEF facilities within IMIP, namely Ranger Nickel (RNI) and Oracle Nickel (ONI). From late 2025, Hengjaya’s limonite ore will supply Nickel Industries’ new HPAL operation, Excelsior Nickel Cobalt (ENC), which is currently under construction and will be discussed in more detail below. Limonite ore at Hengjaya is currently being stockpiled in existing pits in preparation for ENC’s start-up. Ore will be slurried at the mine and pumped approximately 30 km to ENC via a new pipeline, thereby avoiding additional truck usage and increasing carbon emissions.
IMIP’s nickel supply chain expands and evolves
There are currently 53 operating RKEF lines in IMIP and around 20 of these have the capacity to produce low grade nickel matte (35% Ni content) via the addition of sulphur. In order to produce high grade matte (65% Ni content), Tsingshan toll-processes low grade matte in its own converters of which there are a few on-site. CRU understands that some of the matte lines are now being switched back to the production of NPI to support demand from stainless steel mills in China.
Via its JVs with Tsingshan, Nickel Industries owns three NPI smelters with eight operating RKEF lines within IMIP. Hengjaya Nickel Industry (HNI) has two lines and is the only one of Nickel Industries operations that has produced matte as well as NPI. Ranger Nickel Industry (RNI) also has two lines producing NPI, and Oracle Nickel Industry (ONI) is Nickel Industries’ largest facility with four RKEF lines. The plant produced around 39 kt of NPI in 2023, and we expect output of 40 kt in 2024.
After visiting ONI’s RKEF lines, we also visited one of Tsingshan’s stainless steel mills, Guangqing Nickel
Corporations Indonesia (GCNS) Stainless Steel. Molten NPI is transferred to this stainless operation via seven 120 t AOD furnaces. This material is processed in two steps, first entering an refining furnace where the stainless steel melt is fine tuned to meet the required composition requirements. Once this is achieved the molten stainless steel is continuously cast to produce stainless steel slabs and billets for hot and cold rolling. The continuous process provides a significant energy saving due to molten NPI being used in the stainless steel process and eliminating the need to cool and reheat this product.
The GCNS stainless steel mill was jointly established by Guangxin Group and Tsingshan Group. The mill was commissioned in 2016 and has an annual capacity of 3 Mt/y of stainless steel slab and 3 Mt/y of hot rolling.
CNGR nickel cathode seeking LME certification
As part of the IMIP tour we also visited CNGR’s Dingxing nickel cathode plant which has an annual capacity of 50 kt/y. The construction of this plant took just eight months to complete and in February CNGR submitted its application to the LME for certification of its product. They are currently waiting for approval from the exchange.
At present, cathode produced in this facility is from nickel matte produced within IMIP. However, in 2024 as less matte is produced at IMIP with NPI output increasing, CNGR is planning to change the feedstock to MHP produced at the park’s existing HPAL operations, PT Huayue Nickel Cobalt and PT QMB New Materials.
Opting to use MHP as a feed source for cathode means that carbon emissions will be far lower. It is estimated that MHP produced via HPAL will produce 8-10 t CO2 /t Ni produced, whereas by using matte as a feed stock, emissions are much higher, ranging between 60-80 t CO2 /t Ni produced.
IMIP’s third HPAL – ENC to be operating by 2025 Q4
Shanghai Decent (a subsidiary of Tsingshan), along with Nickel Industries, is embarking on a new HPAL project known as Excelsior Nickel Cobalt (ENC). The project has a design capacity of 67 kt/y and will be capable of producing MHP, nickel sulphate, and nickel cathode. It is possible that a second stage of expansion could be considered for ENC, adding another 67 kt/y of capacity. This, however, has not been approved. As discussed above, ENC’s ore supply will come from Hengjaya with the mine’s limonite ore being slurried and then piped via a 30 km pipeline. Emissions for the ENC plant are estimated at less than 8 t CO2 /t Ni because of the sulphuric acid plant which will generate power for the HPAL operation.
During the trip we were able to visit the site where this new operation will be located. Given the ambitious target of start-up by the end of next year, it was surprising to see that there was only an area of cleared ground and some offices and accommodation in place. Nickel Industries management explained that Tsingshan is offering a capex guarantee on ENC’s construction of $2.3 bn, which includes a tailings facility, a sulfuric acid plant, and other supporting infrastructure. If the project is not built on time and on budget, this guarantee is lost. To date, however, this has not occurred, giving Nickel Industries confidence in the project’s timing. Nickel Industries currently has a 10% ownership share in ENC which will expand to 55%. We understand that the company is looking to secure future offtake with OEM’s outside China.
Following our visit to the ENC site we toured the operating HPAL PT. Huayue Nickel Cobalt (HNC), which is a JV between Huayou Cobalt, Tsingshan Group, China Molybdenum, and Nickel Industries. As one of the largest operating HPAL projects in Indonesia, the project has a total capacity of 60 kt/y nickel, 6 kt/y cobalt, and 12 kt/y manganese. Within IMIP, tailings from the HPALs are currently bulk dry-stacked and this is managed by Tsingshan.
Including PT QMB New Materials’ 50 kt/y HPAL plant, which is also located at IMIP, the entire park will have a total HPAL capacity of 177 kt/y Ni-in-MHP once the new ENC is operating at the end of 2025.
Indonesia to dominate the nickel supply chain, but will need to manage environmental concerns
During the past decade, the rapid development of the NPI and stainless steel industry in Indonesia has significantly transformed the global nickel market. After rapidly reshaping the country’s position in the supply chain, Indonesia is not only utilising its upstream ore resources but also collaborating with foreign partners to invest in more downstream higher-value products. By leveraging its abundant nickel ore resources, we believe Indonesia will continue to play an important role in the nickel industry in the long term.
Our visit to IMIP has highlighted the ability of Tsingshan and its partners to supply competitively priced nickel products to both the stainless and EV battery sectors as the size of the park has grown over the last decade. Nevertheless, as HPAL capacity continues to expand and more western OEMs are involved in purchasing from the park, environmental concerns will have to be taken into consideration. Monitoring the environmental footprint and managing tailings within IMIP will be crucial to its future success.
Angela Durrant, Principal Analyst
Tong Tong, Senior Analyst
Panos Kotseras, Head of Stainless Steel Raw Materials
