The recent decline in nickel trading prices, driven by Indonesia’s staggering growth, has significantly affected numerous Western producers, especially those in Australia positioned at the higher end of the cost curve.
As a result,
Australian producers are under growing pressure as they strive to maintain cost
competitiveness. This has led some to reevaluate their operations, choosing to
either suspend or scale back operations as a strategy to preserve capital.
Struggling
Australia
Despite the
higher production costs of Australian nickel, there is an expectation that it
will have greater appeal in terms of ESG considerations compared to Indonesian
supply. This is primarily due to Australia's more rapid adoption of renewable energy
practices, in contrast to Indonesia's utilisation of the highly emissive RKEF
process.
Producers
have proposed the introduction of a 'green' premium or a distinct contract on
the LME to differentiate Australian supply's low carbon credentials from
Indonesian supply, thus justifying its higher costs. However, the exchange has announced
that there are no immediate plans in place to introduce such a contract.