Key Takeaways
- Indonesia now controls over 50% of global nickel mine supply after a decade of rapid expansion.
- LME nickel prices have fallen ~65% from their 2022 peak of $100,000/t.
- Canadian nickel producers (Vale Canada, Glencore) are under significant margin pressure.
- A nickel price recovery requires either Chinese EV demand surge or Indonesian supply discipline.
No commodity story in 2024–2026 has been more dramatic or more damaging to investors than nickel. The metal that was supposed to be the EV revolution’s biggest winner has instead become its most cautionary tale. Nickel prices on the LME have fallen from a crisis-induced spike of US$100,000/t in March 2022 to current levels around US$16,420/t a decline of over 80% from peak. The cause is almost entirely Indonesia.
The Indonesian Supply Machine
Indonesia’s government made a calculated decision in 2020 to ban raw nickel ore exports and force downstream processing to occur on Indonesian soil. The policy worked: hundreds of billions of dollars in Chinese investment followed, building up an enormous nickel processing industry centred on Sulawesi and the Maluku Islands. Indonesia now produces approximately 1.9 million tonnes of nickel content per year up from 800,000 tonnes in 2020 and accounts for more than 55% of global supply.
The key product driving oversupply is nickel pig iron (NPI) a low-purity nickel product made from laterite ore that is suitable for stainless steel production but not, traditionally, for EV battery cathodes. However, a process called high-pressure acid leaching (HPAL) can upgrade Indonesian laterite ore into battery-grade nickel sulphate, and Chinese companies have invested heavily in HPAL capacity. As a result, Indonesian material is now increasingly competing in the battery supply chain the last market that was supposed to support prices.
Implications for Canadian Producers
The nickel price collapse has been devastating for high-cost producers outside Indonesia. Vale’s Sudbury operations in Ontario, Glencore’s Sudbury and Raglan operations in Quebec, and First Quantum’s Ravensthorpe mine in Australia have all faced margin compression. Several Canadian nickel projects have been indefinitely deferred.
Canada Nickel Company (TSX-V: CNC), which is advancing the Crawford nickel-cobalt sulphide project near Timmins, Ontario, has maintained development momentum by emphasising Crawford’s potential as a low-carbon, ESG-compliant nickel source the kind that European automakers have said they prefer for supply chain reasons. But at current prices, Crawford’s economics are challenging.
When Does the Glut End?
Most analysts see the nickel market remaining in surplus through at least 2027. A recovery above US$20,000/t likely requires either a sustained acceleration in EV demand that outpaces Indonesian supply growth, or Indonesian government action to limit NPI exports (which would be politically difficult). The more realistic near-term catalyst is high-cost mine closures outside Indonesia reducing supply a process already underway but moving slowly.