[SMM Nickel Flash News] Tropical Depression Brings Heavy Rain to Northern Philippines, Potential Disruptions.

Indonesia’s Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia said on August 3 that the government will implement a “measured relaxation” of RKAB, with additional mining quotas to be approved gradually while maintaining supply-demand balance. “We will relax it, but in a measured way,” Bahlil said, adding that the government “doesn’t want production to exceed market demand.” The adjustment aims to improve production management flexibility based on market conditions and downstream industry requirements. Bahlil noted that royalty contributions will be considered in the RKAB evaluation process, with higher royalty-paying companies receiving priority consideration. The government is still reviewing miners’ RKAB submissions and has not disclosed the potential quota increase, stating that figures are still under calculation. SMM expects additional RKAB approvals to gradually improve Indonesia’s nickel ore availability in H2 2026. However, uncertainty remains over the final quota size, approval timeline, and allocation criteria, keeping miners and smelters focused on further policy developments.

[8.4 Morning Briefing] Trump stated that an agreement has been reached regarding the Strait of Hormuz, and an agreement on denuclearization will also be reached, with negotiations scheduled to begin on Monday afternoon; Iranian Foreign Ministry spokesman Baghaei stated that the situation in the Strait of Hormuz will not return to the pre-conflict state, and the new shipping lane agreed with Oman will be determined through mutual consultations. The most-traded SHFE nickel 2609 contract plunged below 130,000 yuan in the morning session, closing at 129,520 yuan/mt at the end of the morning session, down 1.91%. As U.S.-Iran negotiations begin, the Strait of Hormuz is expected to resume navigation, sulfur cost support has weakened, and nickel prices have fallen sharply. In the short term, the most-traded SHFE nickel contract is expected to trade in the range of 128,000-135,000 yuan/mt.

Indonesia's nickel industry is facing depletion of high-grade laterite resources continues to reduce average ore quality. It is expected that the country's average nickel ore grade will decline by a further 4–5% in 2026. For example, although transactions may be priced as 1.50% Ni ore, the actual delivered ore grade may average only around 1.43–1.44% Ni. Although the decline appears modest, lower ore grades require miners to process significantly more material to produce the same amount of contained nickel, increasing stripping ratios, raising mining costs, and tightening the supply of premium-grade ore for both RKEF and HPAL smelters.