- Projects planned in Pomalaa, Bahodopi, Sorowako to increase MHP production
- Vale testing use of pyrite as partial substitute for sulphur to manage cost burden
PT Vale Indonesia is pursuing large-scale investments centred on its high-pressure acid leaching (HPAL) projects while maintaining a cautious near-term outlook for nickel prices amid rising supply from Indonesia.
The company expects capital expenditure (CAPEX) to reach around $1.1 billion by 2027, marking the peak of its planned investment programme. CAPEX for 2026 is estimated at around $700 million, covering mine development, HPAL projects, and maintenance of existing facilities. The company has also scheduled approximately $800 million of CAPEX for 2028.
Vale Indonesia has secured a $750 million sustainability-linked loan and may raise additional funding depending on the progress of its future projects.
Rising Indonesian supply weighs on short-term outlook
Vale Indonesia CEO Bernardus Irmanto identified increasing nickel supply and price volatility as key near-term challenges for the nickel market. The company noted that rising Indonesian supply is putting pressure on prices in the short term.
Indonesia’s government is also seeking to manage nickel production volumes to support sustainable prices and the profitability of mining and smelting operations.
Despite near-term supply concerns, Vale maintained a relatively positive medium- to long-term demand outlook. While LFP batteries account for more than 55% of the global EV battery market, around 80% of EV batteries in markets outside China remain based on nickel-containing chemistries, according to the company.
Beyond EVs, Vale sees potential nickel demand growth from data centres, robotics, AI infrastructure and renewable energy.
HPAL projects to expand MHP production
Vale Indonesia is diversifying its nickel production portfolio through projects in Pomalaa, Bahodopi and Sorowako, with a focus on increasing mixed hydroxide precipitate (MHP) production for battery applications.
The Pomalaa HPAL project is targeting an annual MHP production capacity of around 120,000 tonnes. The company is also pursuing HPAL developments in the Morowali region and a limonite project at Sorowako, each targeting up to 60,000 tonnes of annual MHP production.
Pomalaa is scheduled for full-scale production expansion in 2027, coinciding with Vale Indonesia’s expected peak investment year.
Nickel matte production target maintained
Vale Indonesia is targeting 67,645 t of nickel matte production in 2026, in line with its earlier annual guidance.
Production stood at 13,620 t in Q1CY’26, while H1 production reached 29,773 t. The company expects second-half production conditions to improve following completion of maintenance work on its No. 3 electric furnace in June.
The company also noted that the nickel grade of input ore had recently increased to 1.82%, which could improve production efficiency by reducing the volume of raw material required for the same nickel output.
Sulphur prices emerge as HPAL cost concern
Higher sulphur and sulphuric acid prices have emerged as important cost variables for Vale’s HPAL expansion plans. HPAL operations require significant quantities of sulfuric acid to extract nickel and cobalt from limonite ore.
To manage the cost burden, Vale Indonesia is testing the use of pyrite as a partial substitute for sulphur. At Pomalaa, the company is also exploring facilities to recover sulphur or produce sulphuric acid internally using materials generated during the HPAL process.
Market sentiment
Nickel market sentiment remains cautious in the near term, mainly due to expectations of increased Indonesian supply and continued price volatility. However, Vale’s expansion strategy reflects expectations of sustained medium- to long-term demand for battery nickel, particularly from non-China EV markets and emerging applications such as AI infrastructure and data centres.
Note: This article is published as part of a content exchange agreement between SteelDaily and BigMint.
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