Reviewed by Lexie CornerOct 16 2024
Eramet has revised its 2024 targets for Comilog and PT Weda Bay Nickel (PT WBN) due to the exceptionally weak Chinese carbon steel market. Additionally, the Indonesian authorities' recent issuance of a 2024 ore sales permit for nickel ore has fallen short of expectations, further impacting their goals.
Manganese
Due to China's significant reduction in carbon steel production this summer, Chinese manufacturers of manganese alloys have seen a sharp drop in their purchases of manganese ore.
At the same time, the supply of low-grade ore, primarily from South Africa, surged following a brief spike in prices before the summer. This oversupply significantly impacted sales of premium manganese ores, including those from Moanda, Gabon, as well as the market price index (CIF China 44 %), which is currently around $4/dmtu.
The Group's full-year sales volumes of high-grade manganese ore, which were severely limited during Q3, are now projected to range between 6.0 to 6.5 Mt in 2024, with internal sales accounting for roughly 0.7 Mt of that total.
As a responsible mine operator, Eramet has chosen to halt ore production at the Moanda mine for at least three weeks in light of the current situation; sales and shipments will continue during this time. The suspension's duration will be adjusted based on market conditions.
As a result, the volume objective for produced and transported manganese ore in 2024 has been changed from 7.0 to 7.5 Mt to between 6.5 and 7.0 Mt.
Nickel
Eramet's joint venture aims to produce 44 million wet metric tons (Mwmt) of nickel ore in 2024, with plans to progressively expand this to more than 60 Mwmt in the medium term. PT WBN, Eramet’s subsidiary, has already applied for increased mine production for the 2024–2026 period in Indonesia.
While the Environment Ministry approved the expansion in July, followed by the Feasibility Study approval in August, the Mines Ministry issued a revised operating permit (RKAB) this week. Contrary to expectations, this permit limits PT WBN's annual nickel ore sales to 32 Mwmt for 2024 and the following two years, reflecting Indonesia's government transition and delays in permit issuance. This includes 3 Mwmt allocated for PT WBN's own nickel pig iron (NPI) plant.
The sales authorized under the revised RKAB fall significantly short of PT WBN updated 2024 permit application, which aligned with the recently verified mining plan. As a result, PT WBN's volume target for external marketable nickel ore has been adjusted to 29 million wet metric tons (Mwmt) for 2024, with one-third sourced from limonite ore and two-thirds from high-grade saprolite ore.
Despite the reduced volume, the company expects a significant increase in ore premiums due to local supply constraints, which should offset the financial impact on PT WBN's 2024 performance. The second half of the year is expected to see PT WBN sales benefit from a notable premium above the local nickel ore price floor (HPM).
Eramet, along with its partner Tsingshan, plans to pursue revisions to the RKAB for 2025 and 2026 in line with environmental and mining plan authorizations. The aim is to progressively increase production and contribute more significantly to the economic and social development of Northern Maluku province and Indonesia.