Indonesia may have its own nickel price index. Currently, the Indonesian Nickel Miners Association (APNI) and the government, in this case the Coordinating Ministry for Maritime Affairs and Investment (Kemenkomarves), are working hand-in-hand to make preparations to realize this ambition.

APNI Secretary General Meidy K. Lengkey said domestic nickel industry stakeholders plan to meet with a number of price index providers such as Argus Media and the London Metal Exchange (LME).

"They (LME, Argus Media, etc.) are experts in pricing commodities," said Meidy in Jakarta, Monday (10/7).

The discourse to form an Indonesian Nickel Index has been rolling in the last few years. The goal is to form a price index that better reflects domestic nickel prices. This is because currently the benchmark mineral price (HPM) is still oriented to the price from the London Metal Exchange (LME).

The idea to form an Indonesian nickel index was initiated by APNI. According to Meidy, this plan has received the green light from the government. 

"Now it's with the government, it's progressing, it's still on progress. Later maybe in August and September the smelters will be invited by Pak Luhut," said Meidy.

APNI and the government's intention to form their own nickel index was confirmed by the Spokesperson for the Coordinating Minister for Maritime Affairs and Investment Jodi Mahardi. According to the plan, the index will be named Indonesia Nickel Price Index.

"Indonesia is planning to form the Indonesia Nickel Price Index which is targeted to be formed by the end of this year," said Jodi when contacted on Tuesday (11/7).

Jodi said, the concept of forming the Indonesia Nickel Price Index is in line with the existing concept of Reference Coal Prices (HBA). 

The existence of the Indonesia Nickel Price Index, according to Jodi, can bring a number of benefits. 

One of them is providing price certainty for mining business actors and smelter owners and protecting them from price fluctuations on the LME market.

"By having our own nickel price index, we can better monitor market conditions and adjust policies as needed," said Jodi.

Chairman of the Association of Indonesian Mining Experts (Perhapi) Rizal Kasli said it was fitting for Indonesia as a country with large nickel reserves to have a nickel index. According to him, the index needs to be pursued so that it can be used as a basis for reference for world nickel sales. 

"The first advantage is Indonesia's recognition as the world's largest producer of nickel. Second, we can control world nickel prices. Third, miners, traders and the government have a price standard as a benchmark that does not depend on institutions from other countries," Rizal told on Tuesday (11/7).

Nickel companies, including PT Trimegah Bangun Persada Tbk (NCKL), received a positive response to the plan to form an Indonesian nickel price index.

"We support the government's plan to form a nickel index which can later become a reference for the price of nickel produced and sold in Indonesia," NCKL's Corporate Affairs Manager, Anie Rahmi told on Tuesday (11/7).

Director of PT Central Omega Resources Tbk (DKFT), Andi Jaya, said that the formation of the Indonesian nickel index would make the nickel trading system more in line with domestic conditions.

In addition, according to him, this step can also help nickel industry stakeholders make better decisions.

"With the existence of the Indonesian Nickel Index, it can provide more detailed and transparent information regarding nickel prices and trading activities in the domestic market, so that industry players, investors and other stakeholders can get a clearer view of market trends and make good decisions. ,” explained Andi.

Finance Director of PT Vale Indonesia Tbk (INCO), Bernardus Irmanto, said that the formation of the Indonesian nickel index could provide a large bargaining position for Indonesia in the nickel industry.

"As the owner of the largest nickel ore deposit, it is appropriate for Indonesia to have bargaining in determining pricing," said Irmanto.

Nevertheless, he admits that he has not been able to measure the impact of the establishment of the index on business actors.

"Actually, for businesses, we need a functioning index, so that it provides a degree of certainty for our revenue. I can't comment yet whether (the Indonesian nickel index) is better for businesses (compared to the LME) before knowing how the index was formed," said Irmanto.

Image source: ANTARA FOTO/JOJON

Source: https://industri.kontan.co.id/news/indonesia-nickel-price-index-ditargetkan-terbentuk-akhir-2023