At the beginning of 2014 Indonesia, South East Asia’s largest economy and the world’s largest producer of nickel banned raw-ore exports. Since January’s ban, the price of nickel has risen on the global market 33.6% affecting the production of household items as diverse as stainless steel and rechargeable batteries. This begs the question, why would Indonesia ban one of their most profitable exports? The answer is simple, by not exporting the raw-ore, the country has forced its producers to invest in processing locally and forced it’s buyers to further support Indonesian companies (well done).
Coupled with the Indonesian ban are fears that Russia, the world’s second largest producer of nickel, will face sanctions affecting their export as well. Together Indonesia and Russia make up over a quarter of the global nickel supply and without one or both of them both the price and the demand will skyrocket.
Many were holding their breath for the presidential elections in July where it was thought a new candidate may repeal or water down the ban, thus reopening Indonesian raw-ore to the global market but the new president, Joko Widodo who is schedule to be sworn in in early October supports the ban and has promised to continue the policy through his presidency.
While sanctions have yet to touch the nickel mines of northern Russia, it is safe to assume that the global marketplace is on the edge of its seat as the world’s largest single corporate producer, Norilsk Nickel, is based there.
Citi estimates that the price of nickel could reach $30,000 per ton by 2015. Yikes!