LX International expands lucrative Indonesian nickel mine

[Courtesy of LX International Corp.]

LX International Corp. plans to expand nickel production at the Adhi Kartiko Pratama (AKP) mine in Indonesia over the next three years, anticipating an increased demand for secondary batteries despite a recent slump in the electric vehicle (EV) market.

Located near the Morowali Industrial Park in southeast Sulawesi, the AKP mine remains profitable even during periods when EV demand is lower. Home to the world‘s largest nickel reserves, 90 percent of Indonesia’s supplies are around Sulawesi Island. Nickel is a crucial material for nickel-cobalt-manganese (NCM) batteries, which are essential to South Korea’s battery industry. Higher nickel content enhances battery performance and drives future demand.

Nickel prices have seen significant fluctuations, dropping 36 percent over the past year to an average of $16,589 per ton in the first quarter of 2024 from $26,079 per ton during the same period during the previous year, primarily due to oversupply and slowed EV demand. But prices rebounded to $18,173 in April 2024 and continued rising to $19,800 as of Thursday. Despite these price drops, the AKP mine has reportedly remained profitable, with detailed first-quarter earnings to be released soon.

The AKP mine primarily produces ore with a 1.5 percent nickel content but recently sold low-grade ore with a 1.1 percent nickel content. The mining process involves removing organic soil and excavating high-nickel-content soil, with environmental restoration practices in place once the stone content exceeds 30 percent. In 2023, 4,000 drillings confirmed a minable ore amount of 36 million tons with a 1.6 percent nickel content.

LX International plans to conduct an additional 3,050 drillings over the next three years, with updates on minable reserves every two years, the company said. It aims to increase production to 3.7 million tons by 2028 from 1.5 million tons in 2024, or a 147 percent increase.

The AKP mine’s proximity to the sea and excellent port accessibility also reduce transportation costs. With infrastructure improvements, including straightening roads within the mine, due to take place, LX International expects the transportation costs to be cut to $1 per ton from $4 per ton, boosting business viability and rental income.

Acquired by LX International in January 2024, the AKP mine marks a significant step in the company’s Indonesian mining operations, which began with the MPP coal mine in 2007. LX International is also mulling the acquisition of additional nickel mines in Indonesia.