03/10/24
Indonesia’s Ni expansion via HPAL could face challenges
Singapore, 3 October (Argus) — Indonesia is expected to continue expanding its
nickel production in the coming years, especially through increasing its
high-pressure acid-leaching (HPAL) capacity, but the lack of readily available
sulphuric acid and proper management of the tailings waste could pose challenges
to this plan. Production is expected to rise despite an anticipated surplus in
the supply of nickel in the market. Sulphuric acid is used in the HPAL process
to separate nickel and cobalt from nickel ore to produce mixed hydroxide
precipitate (MHP), which is the feedstock for the downstream processing of
nickel sulphate, cathode and battery. Indonesia is expected to produce
325,000-345,000t of MHP this year, up from around 269,000t of in 2023, according
to market sources. But with several MHP projects planned to come online in the
next few years, MHP output for the next three years is projected to treble to
800,000-900,000t, according to the country's deputy minister for the
co-ordinating ministry for maritime and investment affairs Septian Hario Seto on
2 October at a metal event in London. As this would require a lot more nickel
ore and sulphuric acid, there are concerns that the availability of limonite ore
could deplete as fast as the saprolite ore supply, which is mainly used for
nickel pig iron and matte production. There were also discussions that the
Indonesian government will convene with nickel market participants to discuss
about the supply situation of limonite ore. There are currently four HPAL
facilities operating in Indonesia. This includes Huayou's Huayue and Huafei
projects , GEM's QMB project and Lygend's HPAL project. Others were also
concerned that the availability of sulphuric acid could be a limiting factor to
Indonesia's rapid expansion of HPAL production, as sulphuric acid demand from
Indonesian HPAL projects is expected to reach 7.12mn t in 2025, almost 40pc
increase from this year's demand at 5.17mn t, according to Argus estimates.
Indonesia has been importing sulphuric acid from mainly China and South Korea to
meet the growing demand for its production units at Obi Island and Sulawesi. But
a ramp-up in sulphur-burning operations has pushed several MHP producers like
Halmahera Persada Lygend to switch to buying lower-cost sulphur instead. For
most sulphur burners, 1t of sulphur produces around 3t of sulphuric acid. The
startup of Freeport McMoran's Manyar smelter in Java integrated industrial and
port estate in East Java's Gresik, coupled with mining firm Amman Mineral Nusa
Tenggara's (AMNT) copper smelter in the West Sumbawa regency of Nusa Tenggara
province, is also expected to alleviate some supply concerns, with the two
expected to add at least 3mn t/yr of acid capacity by the end of 2025. Proper
disposal of tailings waste could pose another challenge to Indonesia's planned
HPAL expansion, particularly with increasing scrutiny on the environmental,
social and governance (ESG) standards by Indonesia's mining industry. The HPAL
process generates a large volume of tailings, with energy consultancy Wood
Mackenzie estimating an output of 1.4-1.6t of waste from every 1t of nickel
produced through HPAL. There are three common ways to dispose tailings waste –
tailings dam, deep sea tailings and dry stacking. Dry stacking is more widely
used because it is considered as the more sustainable option. But dry stacking
also comes with its own environmental and biodiversity risks, as Indonesia's
seasonal wet weather and seismic activity of the site could be a problem for
waste storage. To ensure a smooth expansion in HPAL production, it is crucial
for Indonesia to find ways to secure the necessary sulphuric acid supplies and
to adopt appropriate methods for tailings waste disposal. By Sheih Li Wong and
Deon Ngee Send comments and request more information at feedback@argusmedia.com
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