Could a shutdown of Indonesian coal and nickel exports be on the cards?
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Indonesia’s exports of thermal coal and nickel could be under threat of shut-downs due to growing concerns that the country has under-reported the number of cases of COVID-19.
With 1,414 cases and 122 fatalities reported as of March 31, Indonesia has now declared a health emergency and moved to suspend foreign arrivals and impose large-scale social restrictions.
Despite this, suspicions have been raised that the actual number of infections may be higher than reported due to its relatively low testing rate.
UBS noted that while there have been some private mine closures, Indonesia has yet to issue a mandate to halt operations like in Peru, South Africa and Argentina.
It added that while thermal coal prices would receive support from an Indonesian shut-down, it would provide a significant lift to nickel prices.
Nickel exploration has already proven to be one of the bright spots for Australian miners, and any price support owing to an Indonesian shutdown would only be welcomed.
For now though, Australian miners in Indonesia are for most part continuing their operations.
Nickel Mines (ASX:NIC) currently produces about 3,600 tonnes of nickel from its 60 per cent owned Henjaya and Ranger nickel projects.
The company boasts cash costs of less the $US7,400 ($12,079) per tonne, well below the current nickel price of $US11,280 per tonne.
It has options to increase its ownership interest in both projects to 80 per cent and has plans to increase its mining capacity.
In February, Kingsrose Mining (ASX:KRM) said it had kicked off a phase-two deep drilling program at the Talang Santo Mine within its Way Linggo gold project.
This was aimed at increasing confidence in the resources as a basis for a reserve estimate that will in turn be key for an underground feasibility study as well as identifying extensions to known high-grade mineralisation.
Kingsrose is already producing gold from Way Linggo with the company reporting revenue of $41.3m in the half year ended December 31, 2019, a fourfold increase from the previous corresponding period, and a net profit after tax of $6.6m.
Nusantara (ASX:NUS) recently awarded the front end engineering and design (FEED) contract for its 2-million-ounce Awak Mas gold project to Indonesia’s PT Petrosea.
The FEED work is one of three critical items the company is progressing in 2020.