"Diving Paradise" needs protection: Indonesia suspends Nickel production in the Raja Ampat Islands due to tourism concerns. Indonesia will suspend the production activities of a Nickel mine in the Raja Ampat Islands of West Papua due to concerns about its impact on the tourism industry.
According to Zhizhong Finance APP, Indonesia, the world's largest supplier of Nickel, will suspend Nickel mining activities near a diving destination known as "Diving Paradise" in eastern Indonesia, primarily due to concerns about its impact on the tourism industry, which is vital for Indonesia's survival. Nickel prices, after experiencing a strong surge in March and a significant rebound in April, may face new catalysts for price increases—since May, Nickel price trends have remained weak and are still at half of the peak levels achieved between 2022 and 2023.
Indonesian Minister of Energy and Mineral Resources, Bahlil Lahadalia, stated to reporters on Thursday that the Nickel mine located in Raja Ampat Islands, West Papua, operated by the Indonesian state-owned company PT Aneka Tambang's subsidiary PT Gag Nickel, will be temporarily suspended, during which a government task force will investigate its impact on the local economy.
It is understood that this region in Indonesia is a marine protected area, globally renowned for its coral reefs and biodiversity, and is highly favored by diving enthusiasts.
"We understand that Raja Ampat is a tourist attraction that must be protected, and its area is very vast," Lahadalia stated at the press conference.
Aneka Tambang did not immediately respond to requests for comment. The mine is located on Gag Island in Indonesia, producing one of the highest-grade Nickel ores in the country, with an overall annual mining quota of 3 million tons.
Over the past decade, Indonesia has rapidly expanded its Nickel mining industry to meet the future growth demand for Nickel Metal in electric vehicle Batteries. Currently, the country accounts for more than half of the global Nickel production, thanks to its large ore reserves and immensely large smelting industry.
Under the catalysis of large-scale supply surplus, the prices of the three major Battery metals—lithium, nickel, and cobalt—used in electric vehicles have plunged since 2023, and the extremely strict capacity restrictions on the supply side will be the core factor determining a comprehensive reversal of Battery metal prices in 2025.
In 2023, the trading prices of lithium, nickel, and cobalt collapsed across the board, followed by a continuous plunge in 2024. The "electrification dream" of these three "Battery metals" focused on electric vehicles has clearly turned into an inescapable "nightmare." Due to low prices eroding the cost curve, Indonesian government authorities have shown positive signs of supply discipline by restricting mining quotas and suspending approvals for new mining processing plants, and the market expects a significant increase in production cuts this year.
According to the metal trading prices from LME (London Metal Exchange), the price of Nickel has plummeted by over 50% since the beginning of 2023, effectively cutting in half. This year, Nickel prices have risen under the market's heightened expectations for production cuts from Indonesian mining companies, currently hovering around $16,500 per ton. In contrast, the Nickel price at the end of 2022 was around $29,880 per ton.
Furthermore, the rapid expansion of the nickel ore industry has raised concerns about deforestation, water pollution, and ecosystem destruction. As Indonesia still relies heavily on coal power, the carbon emissions from smelting this metal are also significant.
This week, Greenpeace protested at a metal conference in Jakarta, the capital of Indonesia, against large-scale mining activities in the Raja Ampat region. The event spread widely through local media and social platforms, prompting a government response.
Indonesia remains the largest supplier of nickel ore in the world. According to data from the United States Geological Survey (USGS), Indonesia's nickel ore reserves accounted for approximately 20.6% of the global total in 2022, ranking first in the world. In terms of output, Indonesia's nickel production reached 1.6 million tons in 2022, accounting for 48.8% of global total output. If the output from the world's largest nickel ore producing country and nickel product exporting country continues to fall below market expectations, it could lead to a long-awaited significant upward trend in nickel metal prices.
