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Nickel Trading
Understanding the Nickel Supply Chain in Indonesia
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Due to Indonesia's unique regulatory framework, mining production and trading licenses are held separately via different entities to regulate and control different aspects of the supply chain. This ensures transparency, accountability, and proper oversight. In this ecosystem, it is largely customary that the nickel producers sell to licensed traders, who then supply the over 44 nickel smelters in the country. This setup creates a very lucrative business case for being a trader within the world’s #1 nickel industry
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Lateritic nickel ore in Indonesia is priced by the government via the HPM pricing system. The HPM price sets the floor pricing allowed for nickel ore based on varying nickel percentages and humidity levels. To maintain a constant flow of ore, smelters provide a sizable premium above the HPM price. This premium not only entices producers to continue their production but also gives traders a strong incentive to source and deliver the nickel ore — effectively shielding both parties from depressed nickel prices while ensuring that smelters continue receiving the high-demand feed they require
1) Cutting out the Middleman
On average, traders earn as much as or even more per metric tonne than producers. By obtaining our traders license, we can substantially increase our bottom line per metric tonne produced.
2) Creating a Standalone Business Model
This license unlocks the ability to source nickel ore from any artisanal or large-scale producer across Indonesia and sell it to the more than 44 operating nickel smelters in the country. Notably, over 14 of these smelters are located within 170 km of the PT Nusa Nickel head office.
3) Brokering the Intermediate Products
The trader license also allows us to broker highly sought-after intermediate products processed by various smelters. These include:
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Nickel Pig Iron (NPI) & Ferronickel: Widely used in stainless steel production
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Matte & Mixed Hydroxide Precipitate (MHP): Essential in the production of battery materials for electric vehicles
New Potential Revenue Streams
Internal Trading Expertise
Our Indonesian executive team comes from a background in nickel trading before they transitioned into production. This deep expertise in the nickel supply chain and established industry connections position us to be able to fully leverage our sought after trading arm. Our strategy was to first put Nusa Nickel into production and then expand into trading, further solidifying our role in this robust supply chain.
A New Subsidiary Created
A new subsidiary has been established, and we are actively applying for our IPP Traders license (the Indonesian traders license). Our executive team has successfully secured this license in a previous venture. We look forward to updating our investors as we progress through the application phase.