A pioneering group of Indonesian nickel smelters with the world’s lowest production costs has been hit by a jump in the price of a key raw material, crimping their profitability just as the market is saddled with a glut.
The price of sulfur, a chemical used to produce acid, has more than tripled in price over the past year, driven by increased demand. That’s a headache for producers in Indonesia that use high-pressure acid leaching, known as HPAL. The breakthrough technique enables the smelters to extract metal from low-grade ore with chemicals, avoiding the need for blast furnaces.
Indonesia is home to the world’s largest nickel industry, with Chinese-led investment and a focus on cost-cutting innovation leading to a boom in production in recent years. The upsurge in supply of nickel metal—a commodity vital for auto batteries—has prompted a slump in prices, with benchmark refined futures in London hitting the lowest since 2020 earlier this year.
That slump has i
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