Indonesia is currently the biggest producer of nickel globally, with last year’s figures showing that it supplied more than 56% of the mined metal. Projections suggested that the country’s nickel production would grow by over 7% this year.
The nation’s nickel boom began after a ban on raw ore exports was implemented in 2020, which prompted Chinese firms to invest in local processing facilities. While this growth bolstered the country’s economy, it also increased the metal’s surplus globally, which placed additional pressure on its prices.
Recently, Indonesia announced that it planned to reduce nickel production by nearly 40%. This would see production reduced to 150 million tons, quite a drop from the 272 million tons of nickel the country produced last year. Globally, nickel’s surplus is forecasted to reduce to 87,000 metric tons this year, a considerable drop from 2024’s 103,000 metric tons.
In its announcement, the government revealed that plans were in place to support prices and manage remaining nickel supply. Despite these assurances, some firms began suspending their operations, with Anglo American announcing the sale of a pair of nickel mines as part of its restructuring. BHP Group also halted operations at its Nickel West mine in Australia.
Macquarie Group Limited argues that this reduction in nickel production could potentially drive up the metal’s prices. At the moment though, the global nickel market continues to record surpluses, with reducing demand from the battery and stainless-steel sectors also contributing to the drop in prices.
As of December 30th, the price of 3-month nickel on the London Metal Exchange was $15,415 per metric ton. This represents a more than 28% drop from its May 2024 peak of $21,615. If prices go below production costs, the risk of mine closures greatly increases.
Some analysts are still optimistic about nickel’s prospects though. Wood Mackenzie’s principal analyst for nickel markets Adrian Gardner expects a 10%+ increase in the demand for primary nickel this year.
Amid this shift in the market, Alaska Energy Metals Corporation remains focused on advancing nickel independence in America. The company’s flagship project, the Nikolai project, is located in Alaska and holds substantial resources of nickel, cobalt, copper, and platinum group metals. These metals are needed by electric vehicle manufacturers and the renewable energy sector.
The increasing demand for plug-in hybrid electric vehicles and the adoption of lithium-iron-phosphate batteries may negatively affect nickel demand though. Whether or not nickel will come out on top by the end of this trying year remains to be seen.
Exploration firms like Fathom Nickel Inc. (CSE: FNI) (FSE: 6Q5) (OTCQB: FNICF) are positive that in the long term, market conditions for nickel are still bullish and they are looking to capitalize on this metal’s demand in North America.
NOTE TO INVESTORS: The latest news and updates relating to Fathom Nickel Inc. (CSE: FNI) (FSE: 6Q5) (OTCQB: FNICF) are available in the company’s newsroom at https://ibn.fm/FNICF
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