Chinese Nickel Producers Plan to Negotiate HPAL Production Cuts in Indonesia
nashnova research
Tsingshan, GEM, Lygend and Huayou Cobalt plan to meet as early as Tuesday to discuss coordinated output cuts at their Indonesian HPAL plants — rising ore costs, surging sulfur prices, and falling nickel and cobalt prices have squeezed margins to breaking point.
Who is cutting, and how?
Tsingshan Holdings, GEM (格林美), Lygend Resources (力勤资源), and Zhejiang Huayou Cobalt (华友钴业) plan a coordination meeting to discuss pro-rata output cuts based on each plant's current operating load.
Their HPAL plants — HPAL stands for high-pressure acid leaching, a process that uses hot, pressurized acid to extract nickel and cobalt from ore — produce MHP (mixed hydroxide precipitate), a key intermediate refined into battery-grade material.
In plain terms = these four companies control a large share of Indonesia's nickel processing capacity. A coordinated cut would directly tighten raw-material supply for EV batteries worldwide.
Why are margins collapsing?
Costs rose on two fronts: Indonesia's government tightened mining quotas and raised ore prices to boost fiscal revenue; the Iran war pushed up the cost of sulfur, a critical input for the HPAL process.
Revenue fell on two fronts: MHP is priced off LME nickel and cobalt benchmarks — nickel has dropped roughly 20% from its May high, and cobalt has hit a near-one-year low.
This means → costs are climbing while selling prices are falling. Margins are being squeezed from both sides, and the push to cut output is a survival reflex.
Is water scarcity making things worse?
Some Indonesian HPAL plants also face water-supply disruptions — the acid-leaching process itself demands large volumes of water.
This reflects a pressure that goes beyond prices: infrastructure and resource constraints are limiting how much capacity these plants can actually run.
Can they reach a deal?
Sources caution that meeting details may still change — neither a firm date nor an agreement is guaranteed. None of the four companies commented.
A similar meeting in August failed to produce consensus.
This means → coordinated cuts sound logical, but the four producers differ in scale and cost structure, making it hard to align interests. Whether they can break the impasse this time is a key test of collective discipline among Chinese nickel producers.
市场有风险，内容仅供研究参考，不构成投资建议。