Indonesia resets its nickel benchmark without changing the physical ore price

Indonesia’s revised HPM formula brings the official reference price for limonite closer to the market.

The read. Indonesia changed the formula behind its official nickel ore reference price on 15 September. For 1.2% nickel limonite, SMM estimates the benchmark has fallen about 45% to US$24.89 per wet tonne, after reductions in both the nickel-grade and cobalt adjustment factors.

That does not mean the ore itself suddenly became 45% cheaper. The same grade was trading at around US$27 per wet tonne CIF on 17 September. What changed is the reference price used to calculate royalties and taxes.

That matters particularly for Indonesia’s HPAL plants, which process limonite into mixed hydroxide precipitate for EV batteries. Many are Chinese-invested and have been dealing with higher input costs, including sulphur imported from the Middle East. A lower reference point for royalties and taxes gives these processors some relief without changing the physical price of their ore.

What to watch. The gap between the official benchmark and actual transaction prices is now the important number. Indonesia’s miners’ association, APNI, has already called for realised prices and state revenue to be monitored. If that gap becomes too wide, pressure to revisit the formula could build.

Ore supply is a separate issue. The change does not alter production quotas under the RKAB system, so a lower benchmark does not automatically mean more limonite reaches processors. For HPAL operators, both the formula and actual ore availability will determine how much relief the change ultimately provides.