Nickel has long retreated from its peak to US$21,950 on Thursday (Aug 25). This price, however, remains attractive so that almost all major business groups in Indonesia have ventured into nickel-and-EV ecosystem.

Golden Energy and Resources Ltd (GEAR), a company controlled by Sinarmas Group, posted net profit of US$279 million in the first half ended June 30, 2022, skyrocketed 859% from US$29 million only in the corresponding period last year thanks to higher average price of both thermal and metallurgical coal.

President Joko ‘Jokowi’ Widodo has just signed Government Regulation (GR) No. 26/2022 to amend GR No. 81/2019 about non-tax revenues in energy and mineral resources sector. The new regulation significantly increases royalty on coal produced by those operating under the mining business permit (IUP) regime from a maximum of 7% to 13.5%. Some companies listed on the Indonesia Stock Exchange (IDX) will be substantially affected.

Coal miner Harum Energy (HRUM), which in recent years aggressively expanded into nickel industry, booked net profit of US$146 million in the first half of 2022, skyrocketed from US$10.36 million in the corresponding period last year thanks to higher average price of both thermal coal and nickel.

Unlike other energy commodities, Newcastle coal futures, the benchmark for top consuming region Asia, stayed above US$400 per ton last week as perception of tight supply remains out there. Projection about increased supplies did prompt investors to unwind some long positions following a massive rally that drove prices to a record level earlier this year. 

We have seen more major business groups entering nickel industry in the first half to include Bakrie Group, Adaro Group/Merdeka Copper, and Indika Group. Late last month, for example, Bakrie Group’s PT VKTR Teknologi Mobilitas signed a memorandum of understanding with PT Tambang Nikel Sulteng (TNS) for nickel ore supply. 

Fast growing nickel processing capacity (nickel pig iron/NPI, ferronickel, and nickel sulphate for EV battery) lifted output of some major miners in the country, which also contributed to higher than average economic growth in Sulawesi Island and North Maluku. PT Weda...

Coal miner Indo Tambangraya Megah (ITMG), controlled by Banpu Pcl (Thailand), booked net profit of US$460.7 million in the first half (H1) of 2022, surged 292% year on year (y/y), as revenues jumped 110% y/y to US$1.42 billion, thanks to higher average prices and improved margins.