Industry

What this industry actually sells

Nickel is sold as nickel units — tonnes of contained nickel metal — but almost never as metal. It is sold as ore, as an iron-nickel alloy, or as a wet chemical intermediate, and the form determines who buys it and at what price.

Everything in Indonesia starts with laterite ore, a weathered soil profile with two layers. The upper layer is limonite, typically 1.1%–1.2% nickel, sitting close to the surface. Beneath it is saprolite, at a higher nickel grade [1]. Two ore types feed two completely different process routes, two different products, and two different end markets.

Saprolite goes into a rotary kiln electric furnace (RKEF) — a pyrometallurgical smelter — and comes out as ferronickel (FeNi), raw material for stainless steel [1]. Limonite goes into a high-pressure acid leach (HPAL) autoclave and comes out as mixed hydroxide precipitate (MHP), which is refined into nickel sulphate and cobalt sulphate — the inputs to lithium-ion battery cathodes [2].

The trade classifies the output into two grades. Class 1 is pure metal, above 99.8% nickel, deliverable against the London Metal Exchange contract, plus the nickel salts made from intermediates. Class 2 is the ferroalloys — FeNi and nickel pig iron (NPI) — which cannot be delivered into LME warehouses at all. In 2024 Class 1 was about 26% of global primary nickel production and Class 2 about 74% [3]. That asymmetry is the single most useful fact for reading nickel prices: the LME contract prices roughly a quarter of the market, and the physical market that dominates volume trades on separate indices.

Three specialist terms recur throughout this report and are worth fixing now. MHP contains 20%–25% nickel and 5%–10% cobalt and is produced by HPAL, a process that grew rapidly in Indonesia — 350 kt produced there in 2024. Nickel matte is the competing intermediate, made by converting NPI, at 140 kt in 2024. Both are shipped mainly to China for refining [3]. NPI is the low-grade ferroalloy China developed from 2005 as a cheaper substitute for FeNi: FeNi typically carries more than 20% nickel, NPI only 10%–12%, and Chinese mills prefer NPI because it costs less to make [4].

Who pays, and for what

Demand is not evenly split. Stainless steel took 65% of primary nickel in 2024; batteries 17%; nickel-based alloys 7%; electroplating 5%; alloy steel and casting 4%; catalysis 2% [5].

Source: Eramet FY2024 Universal Registration Document, main applications of primary nickel, December 2024 [5].

The stainless steel buyer is overwhelmingly Chinese. The International Stainless Steel Forum data cited by Harita puts China at roughly 60% of global stainless production, ahead of Europe (12%), Indonesia (10%), India (8%) and the United States (4%) [4]. On the nickel side, INSG figures cited by Merdeka Battery Materials expect China to account for 63.5% of global primary nickel consumption in 2025, with Indonesia second at 12.2% [6]. One country is the swing consumer for both of nickel's end markets.

Purchasing power sits in a short list of counterparties, and the concentration is visible in the seller's own accounts. Three customers took 70.78% of Harita's FY2025 revenue: Lygend Resources and Technology (44.84%), Glencore International (19.02%) and Ningbo Lygend Wisdom (6.92%) [7]. The pattern repeats across the peer set. Nickel Industries sold all of its 2025 NPI either to Shanghai Decent in China or to stainless mills operating inside the same Indonesian industrial park — PT Indonesia Stainless Steel, PT Qing Feng Ferrochrome and others [8]. Merdeka sells most of its NPI to the Tsingshan group and its affiliates at published NPI prices [9].

Source: FY2025 Annual Report, Note 37 Segment Information — geographic information [10].

Two structural points follow. First, the "Indonesia" line is domestic ore sold to processors, not an end market — the ultimate consumer is still the Chinese mill or the Chinese refinery. Second, the Swiss line is Glencore, a trader rather than a consumer, so a meaningful share of output reaches the end user through an intermediary that holds its own price optionality.

The value chain, and where the margin sits

Because the industry is vertically fragmented across ore, smelting, refining and cathode manufacture, and because several listed players disclose per-tonne economics, it is possible to see roughly where the profit pool sits in a given year rather than guess.

Sources: FY2025 Annual Report, Obi Island integrated value chain [1] [2]; Eramet FY2024, nickel products and supply [3].

The per-tonne disclosures for 2025 are unusually clear. Ore, smelted metal and leached intermediate all sold into the same weak nickel price, and the spread over cash cost differed by a factor of six.

Sources: Merdeka Battery Materials FY2025, mining segment prices and cash costs [11] and RKEF operating data [9]; Nickel Industries FY2025, Hengjaya Mine [12] and RKEF operations [13]; Huayue Nickel Cobalt data as reported by Nickel Industries [14]. Spreads for the ore rows are price less cash cost; Nickel Industries separately reports adjusted EBITDA of US$9.3 per wmt at Hengjaya. Cash-cost definitions are each company's own and are not audited-comparable.

Sources: Merdeka Battery Materials FY2025 RKEF data [9]; Nickel Industries FY2025 RKEF [13] and HPAL [14] disclosures. Derived as realised price less reported cash cost; cash costs exclude by-product credits.

Two mechanics explain the HPAL gap. Cobalt comes out of the autoclave alongside nickel and is credited against cost — Nickel Industries puts the 2025 cobalt by-product benefit at roughly US$1,900 per tonne of nickel, on top of an MHP contract price that rose 8% to US$14,990 per tonne of nickel while NPI prices fell [14]. And HPAL is capital-intensive in a way RKEF is not: Harita's management has put the total investment in the HPL refinery, with a nameplate of 55,000 tonnes of contained nickel in MHP per year, at US$1.2 billion, and described the cash margin on MHP as around 30% [15]. That is roughly US$22,000 of capital per annual tonne of nickel capacity — a barrier that keeps the HPAL field small and, so far, profitable.

The last link is the least visible from Indonesia. Zhejiang Huayou Cobalt, which operates HPAL capacity in Indonesia and refines it in China, reported 2025 revenue of RMB 81.019 billion, up 32.94%, and net profit attributable to the parent of RMB 6.110 billion, up 47.07% — its best result on record. Its Indonesian laterite hydrometallurgical project shipped 236,500 tonnes of MHP, up 30%, and total nickel product shipments reached about 292,500 metal tonnes, up 58.72% [16]. The refining and cathode step, sitting outside Indonesia, grew earnings sharply in a year when the nickel price fell. Huayou itself flags the risk on that side of the chain as overcapacity in precursors and cathodes rather than in nickel [17].

Market size, and the Indonesian share of it

Global primary nickel consumption was 3.3 million tonnes in 2024, growing 4% on the year, driven mainly by stainless steel; production grew about 4% on the back of Indonesian HPAL projects, leaving the market in surplus [18]. INSG figures cited by Merdeka put primary nickel demand growth at 4.8% in 2024 and a projected 5.7% in 2025 [6]. Demand has not been the problem.

Supply has. The concentration of the supply side into one country over five years is the defining structural fact of this industry.

Source: Eramet FY2024 Universal Registration Document, ore production table sourced to INSG, February 2025 [19].

Source: Eramet FY2024 Universal Registration Document, production of finished products, Eramet estimates [19].

Indonesia's finished-nickel output nearly tripled between 2020 and 2024, from 606 kt to 1,780 kt, while world output grew by less than 1,000 kt — meaning Indonesian growth accounted for more than the entire net increase in global supply, with production shrinking elsewhere. NPI's share of global primary nickel production rose to 54% in 2024 from 24% in 2014, and all Class 2 nickel plants in Europe have now stopped, on non-competitive production costs [19].

Harita records Indonesian output of 2.2 million tonnes in 2024, the highest in the world, and attributes the oversupply and the price decline since 2023 to that expansion [20]. The policy that produced it was deliberate: the 2009 Mining Law mandated domestic value addition, the ban on unprocessed ore exports was reinstated in January 2020, and since then all ore mined in Indonesia is destined for domestic use [3] [21].

A caution on the market-size numbers. The filings do not agree on Indonesia's reserve share. Harita's FY2023 report puts Indonesia at approximately 72 million tonnes of nickel, or 52% of a 139-million-tonne world total [22]; Merdeka's FY2025 report puts it at approximately 42% of world reserves and around 50% of world output [23]. Neither states its reserve definition. Stainless-steel production is similarly unreconciled: Eramet reports global output of 61.5 Mt in 2024 [3], while Harita, citing ISSF, puts it at 54–55 Mt [4]. The scope differences are not disclosed; the figures should not be used interchangeably.

How the product is priced

There is no single nickel price. There are at least four, and each stage of the chain is exposed to a different one.

The LME cash price is the headline reference for Class 1 metal. Eramet is explicit that LME volumes and prices "are no longer as representative" of a physical market now dominated by Class 2 nickel for stainless steel, which is why steelmakers have structured supply contracts off the Chinese NPI price index since 2022 [24]. The divergence is measurable: over 2024 the LME price fell nearly 3% to US$15,810 per tonne while the NPI price rose 2% to US$11,635 per tonne [24].

Indonesian ore is priced off a government-set floor. Since 2017 the authorities have published a monthly benchmark, the Harga Patokan Mineral (HPM), calculated as the reference nickel price multiplied by the ore's nickel grade, a correction factor, and one minus the moisture content. For 1.8% nickel ore at 35% moisture, the 2024 floor ranged from US$35 to US$42 per wet tonne, averaging US$38; at 1.6% grade, US$28 to US$34, averaging US$30. A premium on top is negotiated according to local supply and demand [25]. Those premiums are where quota policy shows up in cash: Eramet's Weda Bay joint venture earned premiums close to 50% over the HPM floor in the fourth quarter of 2024, driven by permit-driven supply restriction [26].

MHP is priced as a payability against nickel, with a cobalt credit — which is why MHP realisations rose in 2025 even as the LME fell [14].

The consequence for a reader: a producer's revenue line and the LME chart can move in opposite directions, and a company's product mix determines which of the four prices actually governs its margin.

Where the cycle sits

The current downturn is now in its fourth year, and it is legible in a single series of disclosed annual averages.

Sources: FY2022 Annual Report for 2016, 2019, 2020 and 2022 averages [27]; FY2023 Annual Report for the 2023 average, sourced to World Bank commodity price data [28]; FY2025 Annual Report for the 2024 and 2025 averages, sourced to World Bank Pink Sheet data, December 2025 [29]. 2017, 2018 and 2021 are not disclosed in the corpus and are omitted; the 2022 figure is US$25,638 on the FY2022 report's source and US$25,834 on the World Bank series used from 2023 onward.

The arc: prices peaked at US$33,924 per tonne in March 2022 on the Russia-Ukraine conflict and Chinese restocking, and rose 29% across 2022 as a whole [30]. The 2023 average then fell 17% to US$21,521 per tonne and the price touched US$16,461 in December 2023, with the report naming slowing Chinese demand, excess inventory, weaker EV demand and supply growth "mainly from Indonesia" [28]. Through 2025 prices consolidated in a narrow band, peaking at US$16,066 in March and troughing at US$14,671 in November before closing the year near US$14,884 [31].

One arithmetic note. The FY2025 report states the 2025 average of US$15,162 was "a 19.0% decrease" on the 2024 average of US$16,814 [29]. Those two figures imply a fall of about 9.8%, which is consistent with the same report's citation of the World Bank's October 2025 estimate of an annual decline of around 9% [31]. The 19.0% appears to be an error in the report; the levels themselves reconcile with the FY2024 disclosure that the LME index fell 21.9% year on year in 2024 [32].

Read across the players, the cycle commentary triangulates rather than diverges. Every large producer in this corpus reported the same three things in 2025: falling realised prices, falling unit cash costs, and a squeeze that landed differently depending on product mix.

Sources: Harita Nickel Annual Public Expose minutes, June 2024 [15] and June 2025 [33], and June 2026 [34]; FY2024 Annual Report [32]; Eramet FY2024 [26] and FY2025 [35] [36]; Nickel Industries FY2025 [13]; Merdeka Battery FY2025 [37]; Huayou Cobalt FY2025 [16].

The prior cycle offers a scale reference. Nickel Industries — a pure Indonesian RKEF operator listed in Australia — earned US$110.6m attributable in 2020, US$137.9m in 2021 and US$159.0m in 2022, then US$121.6m in 2023, before swinging to losses of US$168.6m in 2024 and US$57.1m in 2025 [38]. The same business model produced a swing of more than US$300m between the top and the trough of this cycle.

The forces that divide this arena

Sources: MoEMR Regulation 17/2025 as summarised in the FY2025 Annual Report [39]; Nickel Industries FY2025 on RKAB delay [40] [12]; royalty regime under GR 26/2022 [41] and GR 19/2025 [42], with amounts charged from Note 30 [43]; customer concentration from Note 29 [7]; LFP share as put to management at the 2026 public expose [44]; NPI share [19]; sulphur disruption [34]; B40 and royalty cost effect [11]; assurance standards [45] [46].

The quota is the industry's supply valve

Because Indonesia is the marginal supplier of the world's nickel, the Indonesian permit calendar is now a global price variable. The mechanism is the Rencana Kerja dan Anggaran Biaya — RKAB — an annual work plan and budget that fixes how much ore each licence holder may produce and sell. Ministerial Regulation 17/2025 cut its validity from three years back to one, explicitly to "strengthen Government control over mining activities" and balance domestic needs against exports [39].

An annual permit is an annual outage risk. Nickel Industries' Hengjaya mine undertook no mining activity from mid-September 2025 until its extension was granted on 12 December, incurring US$21.3 million of standby charges and taking segment adjusted EBITDA down to US$91.6m from US$100.9m [40] [12]. Its limonite supply contract to a domestic trader lapsed entirely from October 2025 because the approved RKAB would not cover it, and resumed in December at a reduced 250,000 wmt per month [8].

The 2026 tightening is larger in scale than anything in the prior three years.

Sources: FY2025 Annual Report, which sets the 2026 nickel RKAB at approximately 260–270 million tonnes against 2025 production of around 364–379 million tonnes (midpoints shown) [47]; Eramet FY2025, reporting notification of an initial 2026 RKAB filing for 12 Mwmt at PT Weda Bay Nickel, of which 9 Mwmt for external sale, with the intention to request an upward revision [36].

The Weda Bay figure deserves emphasis because of what the same mine did the year before: its 2024 RKAB allowed 32 Mwmt of production for 2025, of which 29 Mwmt were targeted for external sale [26]. An initial 2026 filing of 12 Mwmt at the world's largest nickel mine is a very different starting point, whatever the eventual revision. Eramet's own 2026 expectation follows directly: domestic Indonesian ore prices should benefit from premiums higher than 2025, supported by tension on Indonesian ore supply [36].

Harita's own framing is consistent: the government introduced quota adjustment as a way to maintain market balance and price stability, the discussion began to move market expectations in the fourth quarter of 2025, and prices briefly held around US$16,000 per tonne in early January 2026 — a move management characterises as sentiment-driven, not yet a change in the fundamental surplus [31].

The state's take has been repriced

Until April 2025 the royalty on nickel ore sales was a flat 10%, or 2% for ore below 1.5% nickel content, under Government Regulation 26/2022 [41]. Government Regulation 19/2025, effective 11 April 2025, replaced it with a sliding scale of 14% to 19% indexed to the global reference price [42]. The effect landed inside cost of goods sold within the same year: Harita's royalty charge rose to Rp1,337bn plus a Rp173bn adjustment in respect of the prior year, from Rp838bn in FY2024 — with under nine months of the new rate applying [43].

Two further state levers appeared in 2026. A new HPM benchmark formula, implemented in mid-April 2026, extends the priced value to associated minerals — nickel, cobalt, chromium and iron — rather than nickel alone; and a single-gate export system under Danantara Sumber Daya Indonesia came into force in June 2026, aimed at under-invoicing and transfer pricing [46]. Separately, mining land clearings without a forest-area use permit became subject to administrative fines set by ministerial decree in December 2025 [48]. Taken together, the state has moved in one direction: a larger and better-monitored share of the value the resource produces.

The players that matter

Six names dominate the Indonesian nickel arena in this corpus. Four are genuinely comparable and are set out below; two require caveats. INCO (PT Vale Indonesia) and ANTM (PT Aneka Tambang) are named as peers in the run's screen but no filings for either are present in the corpus, so neither can be benchmarked here. Eramet is included because it owns the world's largest nickel mine through PT Weda Bay Nickel, but it is a manganese-led diversified group and its consolidated figures are not a nickel read-across.

Sources: Harita Nickel FY2025 Annual Report, revenue Rp29,633bn, gross margin 32.7%, profit for the year Rp10,970bn [49]; Merdeka Battery FY2025 consolidated statement of profit or loss [37] and segment review [50]; Nickel Industries FY2025 consolidated statement of profit or loss, with the profit line being the loss attributable to owners [51]; Huayou Cobalt FY2025 [16]; Eramet FY2025 adjusted revenue and net result attributable to the group [35]. Figures are each company's reported currency and are not FX-converted; gross margin is not disclosed on a comparable basis for Huayou or Eramet and is shown as blank. Nickel Industries growth is derived from reported FY2025 and FY2024 revenue.

The table carries one comparability warning worth stating plainly. Harita's reported revenue excludes its HPAL refineries and its newest RKEF smelter entirely: HPL, ONC and KPS are equity-accounted associates, and their contribution arrives as share of profit — Rp4,091bn in FY2025, against Rp2,013bn in FY2024 [49]. Merdeka and Nickel Industries consolidate more of their processing chain. Revenue and gross margin are therefore not measuring the same span of the value chain across these companies.

Capacity, not revenue, is the better scale comparison in this industry. Harita ended 2025 with three RKEF smelters at roughly 240,000 tonnes of contained nickel in FeNi per year and six HPAL lines at approximately 120,000 tonnes of nickel-cobalt compound metal, including about 14,250 tonnes of cobalt; it sold 188,581 tonnes of nickel in FeNi and 130,551 tonnes of MHP and nickel sulphate in 2025 [52] [53]. Nickel Industries produced 124,966 tonnes of nickel metal in NPI [13], and Merdeka's RKEF fleet produced 73,871 tonnes of nickel equivalent [9]. Harita's mining base sits on estimated reserves and resources of 310.8 million wet tonnes, 215.1 Mt of it limonite and 95.7 Mt saprolite [54].

A disclosure gap worth naming. Merdeka and Nickel Industries both publish cash cost per tonne of nickel on an explicitly stated industry convention [9] [13]. Harita does not publish a cash cost per tonne in any document in this corpus; it describes itself as holding "competitive cash costs among industry peers" and as aiming to be "the lowest cash cost producer" without quantifying either [55] [21]. A like-for-like cost-curve position for Harita cannot be established from the primary record.

Three currents running through the arena

Profit is migrating up the chain, toward the ore

For most of the downstreaming decade the story ran the other way: value was supposed to move downstream, from ore into metal. In 2025 and the first half of 2026 the disclosed economics point upstream. Limonite ore earned a US$5.3 per wet tonne spread at Merdeka's SCM mine while saprolite earned US$1.9 [11]; Nickel Industries saw its saprolite contract price fall 30% while limonite rose 31%, on higher demand from Indonesian HPAL projects [12].

Harita's own segment accounts show the same shape. In the first half of 2026 its nickel mining segment produced Rp2,941bn of gross profit on Rp8,957bn of revenue — a 32.8% margin — while nickel processing produced Rp2,173bn on Rp10,431bn, a 20.8% margin [56].

Source: Q2 FY2026 interim consolidated financial statements, Note 32 Segment Information, segment figures before eliminations [56].

Management's own account of why is worth recording: the mining segment grew because the new KPS smelter demands more ore, the mining margin is higher in percentage terms because production costs are lower, but in absolute terms mining remains the smaller contributor because the price per tonne of ore is far below the price per tonne of processed product [57]. If quota tightening keeps ore scarce relative to smelter capacity, that relationship is the one to watch.

The two process routes have decoupled

RKEF and HPAL now sit in visibly different places. RKEF sells into stainless steel at a price index that has been flat to falling, against cash costs that have proved sticky — Nickel Industries cut RKEF cash costs only 1.8% in 2025 while its sale price fell 8.8%, and notes that group RKEF cash costs remain at 2021 levels [13]. HPAL sells into the battery chain with a cobalt credit and, at Huayue, ran 42% above nameplate capacity in 2025 [14].

Harita frames the two routes as complementary rather than competing: RKEF as the more stable, lower-cost structure that acts as a margin stabiliser when prices are pressured, HPAL as the higher-value-added exposure that is more sensitive to input prices such as sulphur but benefits from cobalt by-product credits [58] [49]. The 2025 peer numbers put more of the margin in the second of those.

The counterweight is chemistry. LFP batteries contain no nickel at all, and were put to Harita's management in June 2026 as accounting for roughly 80% of Chinese EV battery installations. Management's answer is segmentation rather than displacement: nickel chemistries serve mid- to upper-class vehicles requiring higher energy density in Europe and the United States, where charging infrastructure is sparser, while LFP suits China's denser charging network — and NCM cells are more recyclable into black mass and back into nickel sulphate [44]. Harita's FY2025 report makes the same argument, calling the battery-chemistry contest "market segmentation rather than a structural shift in global nickel demand" [29]. The record supports that the two chemistries serve different segments; it does not settle how those segments' relative sizes evolve.

Harita's own two estimates of the battery share of nickel demand also differ within the same FY2024 report: one section puts it at around 14% of total nickel production, up from 3%–4% five years earlier, with stainless steel falling from about 70% to 65% [59]; another, citing Mining.com, puts it at nearly 17% in 2023, up from 3% in 2020, with stainless steel down from 71% to 64% [60]. The direction is unambiguous; the level is not.

Cost, not price, is where 2026 is being decided

Every producer in this corpus reported the same cost architecture under pressure. Sulphur is the critical HPAL reagent, and its price rose through 2025, partly offset by higher cobalt as a by-product credit [31]. Then in 2026 the Strait of Hormuz closed. Harita reports minor disruption to sulphur distribution, says it anticipated the trend from the end of 2025 by holding three to four months of site stock, and describes a diversified supplier base not dependent on the Middle East [34]. Eramet, independently, flags the same event — military operations from late February 2026, Hormuz tension, higher energy and freight, and a surge in commodities "such as sulphur, an input used in several industrial processes relevant to our markets" — as a new source of uncertainty for 2026 [36].

On the mining side, Merdeka attributes higher saprolite cash cost directly to increased royalty and to the mandatory B40 biodiesel blend [11]. Producers are responding by internalising reagents: Harita is building a quicklime plant through PT Cipta Kemakmuran Mitra specifically to replace externally purchased quicklime, a principal HPAL input, at a stated investment of around US$70 million [33] [46].

Meanwhile the price consensus for 2026 sits at roughly US$16,450 per tonne on the LME per Eramet's mid-March 2026 reading [36] — above the 2025 average but below 2024. With prices range-bound, the variables that move producer margins in 2026 are quota volume, royalty, reagent cost and utilisation, not the LME print.

What the record does not settle

Four things this corpus cannot resolve, stated so they are not mistaken for gaps in the analysis.

Cost-curve position. With no per-tonne cost disclosure from Harita, its claimed low-cost position cannot be tested against the peers that do publish one [55].

Market share. No document in the corpus states any producer's share of Indonesian or global nickel supply on a consistent basis. Capacity and volume comparisons above are the closest available substitute.

The size of the quota cut in practice. The 2026 RKAB figures are national ceilings and initial filings, both subject to revision — Eramet explicitly states its intention to seek an upward revision [36], and Nickel Industries received an increase to 14.3 million wmt for 2026 after year end [12]. Announced quotas and realised production have not historically been the same number.

Guidance. Harita states that it does not publicly disclose detailed financial or operational targets, citing commodity volatility, national mining governance policy and RKAB sensitivity. There is consequently no company guidance against which the industry outlook above can be measured.

For how these forces show up in the named rivals' record against this company, see Competition; for how Harita itself arrived at this position, see History.