Although the frenzied market of "Devil Nickel" was temporarily halted as LME suspended nickel futures trading, Lenny's rise to $100000 a tonne had far-reaching implications, and Indonesia, the world's largest nickel producer, decided to increase the metal's production capacity.
Indonesia plans to increase its nickel production capacity by 393000 tons to 400000 tons this year, bringing its total production capacity to 1.4 million tons, and will increase its annual production capacity by another 500000 tons next year, Indonesia's Minister of Ocean Affairs and Investment Co-ordination Minister Luhut said on Wednesday.
Mr Luhut added that this additional capacity would be enough to offset any loss of supply in Russia or elsewhere.
The biggest use of nickel is in the manufacture of stainless steel. More than 70% of the world's nickel is used in the manufacture of stainless steel, and it is also an important raw material for the production of electric car batteries. As Russia is an important metal producer, its nickel production accounts for about 11% of the world, ranking third in the world. After the escalation of the conflict between Russia and Ukraine, nickel began to soar as western countries imposed a series of sanctions against Russia and markets feared a shortage of the industrial metal.
Mr Luhut said that in view of the current "unprecedented" situation, Indonesia would closely monitor market movements before deciding to impose export taxes on ferronickel and nickel pig iron.
Indonesia, the world's largest exporter of thermal coal, banned coal exports in January on the grounds of ensuring domestic electricity supply. Mr Luhut said on Wednesday that he believed the government did not need to impose a ban on coal exports because Indonesian coal mining companies had to comply with a requirement to supply at least 25 per cent of domestic production to meet local demand.
Indonesia plans to increase the royalties levied on coal, which will rise as market prices rise, which could be released next month, according to Luhut.
Financial Associated Press: Xia Junxiong edited by Zhang Xiaolong
