During two weeks of reduced production at the core nickel smelting plant in Indonesia due to the accumulation of waste materials becoming a problem

According to informed sources, a large smelting plant in Indonesia's core nickel production area, which is controlled by a Chinese company, is reducing its production due to its tailings dam nearing full capacity. This event highlights the increasingly severe waste management challenges in the nickel industry. The sources said that the production cut at PT QMB New Energy Materials Co. Ltd. in Indonesia will last at least two weeks. The company's shareholders include GEM Co., Ltd. (002340.SZ) and Tsinghan Holding Group Co. Located in the Morowali Industrial Park in Sulawesi, Indonesia, which is the country's largest nickel industrial base and where the QMB plant is located, a park representative confirmed the reduction in production capacity utilization and added, "The tailings dam located in the park is close to saturation, while the relevant approval documents for a new tailings dam are still being processed." As the largest investor in QMB, GEM Co., Ltd. did not immediately respond to requests for comment. Thanks to the capacity expansion driven by Chinese investment, Indonesia's nickel production accounts for more than half of the global total production. Nickel, a key raw material for electric vehicle batteries and stainless steel, is widely used in the production of high-pressure acid leaching (HPAL) processes, which can handle low-grade ore with relatively low costs, but it generates a large amount of waste - this type of waste usually needs to be dried, compacted, and stored. With the rapid expansion of the nickel industry, local supervision and regulation of the industry in Indonesia are increasing, partly due to environmental concerns related to waste management. Experts question whether the HPAL process, widely used in Indonesia, a tropical archipelago country prone to heavy rainfalls and earthquakes, can be applied safely and sustainably. Earlier this year, a fatal landslide accident occurred at the tailings dam in the Morowali Industrial Park, leading to a temporary halt in production. In addition, producers using the HPAL process are facing pressure from rising sulfur procurement costs - sulfur is a chemical necessary for producing sulfuric acid. However, demand for nickel cobalt hydroxide products (a nickel product containing cobalt) produced by HPAL plants has received strong support this year. This is mainly due to the Democratic Republic of Congo's implementation of cobalt export controls. Rebound opportunity In a year where base metals have performed poorly overall, nickel's performance has been particularly lackluster - oversupply has put pressure on prices and squeezed profitability in the entire industry. A report by a German commercial bank pointed out that this situation in the market is mainly due to a significant increase in supply, especially the explosive growth in production in Indonesia. Data from the International Nickel Study Group shows that global primary nickel production increased by 5% last year, and "is expected to increase by another 8% this year." The institution predicts that this growth momentum will continue, with production expected to increase by 7% next year. However, the German bank also pointed out that despite the current oversupply, there is a significant risk of a sharp reversal if Indonesian regulatory policies take effect. Thu Lan Nguyen, director of foreign exchange and commodities research, emphasized that if the Indonesian government can effectively curb domestic production through stricter regulations, nickel prices could rebound quickly. Just as recent market reversals in other base metals, stricter production controls could trigger more dramatic price fluctuations in nickel.