On April 13, 2026, Indonesia's Ministry of Energy and Mineral Resources (ESDM) held a meeting regarding the revision of the Indonesian nickel ore benchmark price (HPM), serving as an official announcement of the price revision decision. Regarding the correction factors: the correction factor (CF) for 1.6% grade nickel ore was raised from 17% to 30%, with a provision that for every 0.1% increase/decrease in nickel grade, the factor would correspondingly decrease/increase by 1%. The correction factors for cobalt (Co) and iron (Fe) were both set at 30%, while that for chromium (Cr) was set at 10%. Regarding the pricing of associated minerals: pricing was introduced for cobalt content (inclusion threshold: ≥0.05% would be counted), iron content, and chromium content. The tax base for the nickel portion remained at previous levels, while the cobalt portion would be subject to a 2% tax rate (for associated cobalt in nickel ore). The official ministerial regulation had not yet been signed and was expected to be issued on April 15.
Under the new rules, with the significant upward adjustment of the nickel correction factor and the addition of pricing for associated minerals, the Indonesian HPM price for nickel ore rose by more than 100%, marking a substantial price increase.
It should be clarified that the upcoming regulation expected from the ministry, ESDM No. 144 Tahun 2026, and its predecessor, ESDM No. 268 Tahun 2025, which it would replace, only involve modifications to the HPM price of Indonesian nickel ore. The regulation applies to companies and legal entities holding IUP/IUPK (mining permits) and similar nickel ore licenses.
1. Does the sharp increase in Indonesia's HPM represent a rise in domestic nickel ore settlement prices?
In early April, an Indonesian nickel ore with a composition of Ni 1.5%, Co 0.1% (relatively high), and Fe 25-30% had an HPM of $26.66/wmt. Assuming the new regulation took effect, using the early-April HMA prices for each metal for simulation purposes, and temporarily excluding the cost of chromium in the ore (as the HMA for chromium had not yet been clarified in terms of which exchange or pricing agency it would reference), the calculation showed that for nickel ore with a nickel content of 1.5% used for pyrometallurgical processing, the HPM would reach at least $62.5/wmt (current CIF settlement prices for the same grade of ore were $75-78/wmt), representing a 135% increase.
For nickel ore with a nickel content of 1.1%, a cobalt content of 0.1% (moderate content), and an iron content exceeding 40% for HPAL processing, since its HPM did not include the value of iron, the HPM stood at $38.25/wmt (current CIF settlement prices for the same grade of ore were $34-38/wmt), representing a 182% increase.
However, domestic prices of nickel ore in Indonesia were not entirely based on HPM prices. The pricing mechanism for Indonesian nickel ore involved calculating CIF/FOB prices by adding a premium to the corresponding HPM. The HPM price was primarily linked to the resource royalties payable by companies holding mining permits, such as IUP/IUPK. The regulation expected to be amended by the Indonesian Ministry of Energy and Mineral Resources, ESDM No. 268 Tahun 2025, only involved modifications to the HPM price and did not affect changes in resource royalties.
For example, in early April, the delivered price of 1.5% nickel ore from Sulawesi, Indonesia, was generally around $75/wmt. This price consisted of the HPM of $26.66/wmt for 1.5% nickel ore plus a $49/wmt premium, with the premium covering market negotiation and freight costs.
2. Combining Tax and Price: How would mine costs be affected?
The original regulations governing royalty rates were PP No. 18 (2025) and PP No. 19 (2025), which were Indonesian government regulations signed by the President. These were not the same documents as ESDM No. 144 Tahun 2026 and ESDM No. 268 Tahun 2025, which could be issued by the Ministry of Energy and Mineral Resources (ESDM), and the difference in issuing authorities made clear their distinct scopes of authority. Currently, Indonesia's ESDM and relevant industry groups are actively involved in revising the country's resource royalty framework. The discussion outcomes are shown in the table below, though these were not final results.
In early April, the royalty for nickel ore with 1.5% Ni and 0.1% Co stood at $3.74/wmt. Under the proposed new rules, as it had not yet been clarified what royalty rates would apply to the iron and chromium value in nickel ore, the royalty would be at least $6.98/wmt (iron up to $0.1, cobalt $0.22, nickel $6.76), representing an increase of at least $3.2/wmt in royalties. Similarly, for ore with a nickel content of 1.1%, a cobalt content of 0.1%, and an iron content of 40% used for HPAL processing, the royalty would increase by at least $2.3/wmt.
|
Original Regulation |
New Regulation (Planned) |
|
|
Source: Mysteel
3. How would rising mine costs affect smelter product cost support?
If the increase in mine costs is fully reflected in their transaction prices, transaction prices for Indonesian ore used for pyrometallurgical and hydrometallurgical processing would rise by $3.2/wmt and $2.3/wmt, respectively. Pyrometallurgical production costs would increase by Yuan 2,800/tonne in Ni. content (approximately US $360/tonne in Ni. content), while hydrometallurgical production costs would increase by Yuan 2,730/tonne in Ni. Content (approximately US $350/tonne in Ni. content).
Based on nickel ore used for pyrometallurgical processing (1.5% Ni, 0.1% Co, 25-30% Fe) prices at $77 + $3.2/wmt, and nickel ore used for hydrometallurgical processing (1.2% Ni, 0.1% Co, 40% Fe) prices at $37.5 + $2.3/wmt, the corresponding cash costs would be: Indonesian high-grade nickel matte at approximately $16,000/tonne in Ni. content (excluding cobalt credits from the finished matte, with cobalt credits valued at $1,000/tonne in Ni. content); Indonesian nickel pig iron (NPI) cash cost at approximately $15,350/tonne in Ni. content; and Indonesian MHP cash cost at approximately $17,800/tonne in Ni. content (excluding cobalt credits from finished MHP, with cobalt credits valued at $5,000/tonne in Ni. content). The corresponding refined nickel cost via the integrated MHP production route would be approximately $20,800/tonne in Ni. content (excluding cobalt credits from finished MHP, with cobalt credits valued at $5,000/tonne in Ni. content), while the refined nickel cost via the integrated high-grade nickel matte production route would be approximately $18,500/tonne in Ni. content (excluding cobalt credits from finished matte, with cobalt credits valued at $1,000/tonne in Ni. content).
4. How was Indonesia's nickel ore market reacting as the new regulation approached?
In early April, Indonesian nickel smelters had just concluded their nickel ore procurement for the period when the draft amendment to the new regulation was about to be implemented. Previously, hydrometallurgical nickel ore had a very low HPM and loose grade specifications, resulting in little price difference for ore with 1.0-1.2% nickel content, and acceptance standards were also lower than those for pyrometallurgical ore.
If the new regulation were implemented, the HPM for hydrometallurgical ore would rise to current CIF settlement levels, encouraging mines to extract lower-grade nickel ore, smelters to tighten inspection standards, and price spreads between different ore types to widen. For mining companies, the economics of extracting saprolite ore with 1.0-1.3% nickel and 30-35% iron content would decline significantly.
Furthermore, the HPM for pyrometallurgical nickel ore would include cobalt pricing and taxation, even though the resulting nickel pig iron and downstream stainless steel do not require cobalt. After the new regulation took effect, pyrometallurgical nickel ore would incur resource royalties for cobalt, amounting to an estimated $0.2-0.25/wmt. While the amount was limited, it would increase the cost of removing cobalt from stainless steel nickel feedstock, potentially pushing NPI smelters already facing losses to seriously consider the value of scrap utilization.
With mine costs set to rise, mining companies were expected to raise their offers accordingly. Given that the total approved RKAB nickel ore volumes in Indonesia were unlikely to meet the increasing demand from nickel smelters, most smelters planned to ramp up procurement and stockpiling before the new regulation took effect. Currently, nickel ore inventories vary significantly across smelters: a few large smelters had only a half-month supply left, while most had one to two months of supply.
Written by Cora Ji, jiruyan@mysteel.com
Join Mysteel's April 30 webinar to explore whether supply disruptions will drive the next leg higher for lithium and nickel markets in Q2 2026. https://www.mysteel.net/event-listings/100067-q2-2026-lithium-and-nickel-will-supply-disruptions-fuel-further-price-hikes
