New Nickel Smelters Are Scattered This Is Valle’s Way to Maintain Competitiveness

Vale Indonesia Finance Director Bernardus Irmanto said that the current head to head competition for the market for the smelter project is unlikely. The reason is, his party already has a long-term contract agreement with Sumitomo, so that the product has been contracted and there is no need to look for new buyers again.

However, he admitted, the company will likely compete with other smelter companies for the next smelter project to be built.

“In the long term, regarding the two development projects of processed products from the facilities we built, there will be direct competition with the factories being built,” he explained in Public Expose Live 2021, Wednesday (8/9/2021).

Bernardus said that most of the smelters being built recently are to produce Nickel Pig Iron (NPI) and Ferronickel (FeNi) which are classified as second-class nickel.

“Meanwhile, the direction of the market itself, if we look at the next few years, will be more dominant in class one,” he said.

The first class nickel, such as nickel sulfate, can be used as a battery component. According to him, later the use of nickel will be more specific, not only for stainless steel, but for the needs of electric vehicles and others.

“Of course the existence of factories in Sulawesi and North Maluku must be monitored, carefully looking at the impact of nickel prices in the future and the world market in the future,” he said.

It should be noted that Vale is currently planning to work on three new nickel smelter projects, including the High Pressure Acid Leaching (HPAL) smelter in Pomalaa, Southeast Sulawesi, the ferronickel smelter in Bahodopi, Central Sulawesi, and the existing smelter expansion project in Sorowako, South Sulawesi.

The company estimates that it will invest up to US$ 5 billion or around Rp. 72.5 trillion (assuming an exchange rate of Rp. 14,500 per US$) for the three projects.

The Bahodopi smelter is planned to partner with a Chinese company and produce ferronickel products that will enter the stainless steel market. Meanwhile, the Pomalaa project is an HPAL smelter that will partner with a Japanese company, Sumitomo Metal Mining Co. Ltd. (SMM) and produces products for electric vehicle battery raw materials.

Meanwhile, the smelter expansion in Sorowako is to increase nickel matte production capacity by 10,000 tons per year from the current 73,000 tons per year.

The government also targets that by 2024 there will be 53 processing and refining facilities or smelters operating, consisting of 4 copper smelters, 30 nickel smelters, 11 bauxite smelters, 4 iron smelters, 2 manganese smelters, and 2 lead & zinc smelters.

However, until 2020, Indonesia only has 19 operating smelters and this year it is targeted to increase by 4 smelters, bringing the total to 23 smelters.