Indonesia stops approving specific nickel ore processing projects to address the problem of oversupply.

Indonesia, the world's largest nickel producer, has halted the approval of applications for nickel ore processing plants producing certain intermediate products, as part of a new measure to promote value-added industrial chains. According to the Indonesian government's directive, Industrial Use Permits (IUIs) will not be issued to new projects planning to produce certain intermediate products (including nickel pig iron/NPI, mixed hydroxide nickel cobalt/MHP, etc.) without further processing. Indonesia is the world's largest nickel-producing country, accounting for about 60% of global nickel production. The country banned the export of nickel ore in 2020 to boost investments in related processing industries. This latest measure is another blow to this rapidly growing industry, forcing new entrants to increase capacity downstream - which could result in project delays and cancellations. Citigroup analysts, including Ryan Davis, wrote in a report on Thursday: "This regulation underscores the government's determination to address Indonesia's ongoing supply glut issue. Specific implementation details remain unclear, particularly concerning how strictly the regulation will be enforced." According to Citigroup analysts, many businesses have already obtained Industrial Use Permits for factories under construction, but the new regulation may affect projects that are not scheduled for completion until after 2027. In the next three years, several high-pressure acid leach facilities will be built and put into operation - these facilities produce MHP. This mixture can be further processed to convert into precursor chemicals used in the electric vehicle battery industry, but Indonesia currently lacks factories with this processing capability. The directive was initially issued in a June Indonesian government regulation, but it has only recently sparked discussion in the market.