On life support: Australian nickel industry ponders its future
Australian nickel miners are adjusting to a "new normal" of an oversupplied global market where they lose out to cheaper Indonesian producers. They are flexing their ESG muscles to command a green premium, but buyers are reluctant to pay up.
One downside of being a globally traded commodity is that it’s difficult for producers to differentiate their product and convince customers to pay more for it.
But Australian nickel producers are hoping to do exactly that - to demonstrate that their product has better environment, social and governance credentials compared to ores mined elsewhere - notably Indonesia.
Commanding a green premium would help nickel producers overcome a recent structural shift that has seen Indonesia emerge as the world’s largest producer with a 55% market share, tipped the market into oversupply and threaten the viability of Australia’s relatively higher-cost nickel operations.
BHP and Andrew Forrest’s Wyloo Metals have already put mines into care and maintenance or cancelled plans to expand nickel smelting refineries due to the crisis which has seen global nickel prices fall 45% since January 2023. BHP made a shock $US3.5 billion write down of its Nickel West operations and threatened to close the unit entirely if conditions do not improve.
