NICKEL: Diminishing ore grade
Indonesia controls up to 70% of global nickel supply. This concentration changes incentives as flooding the market no longer buys significant market share. Instead, Jakarta is pivoting to from scaling market share to controlling leverage.
One of the reasons for Indonesia’s pivot is official concern, as well as corporate warnings, over falling ore grades in the country after such dramatic increase in mining.
The amount of ore Indonesia is mining, is crazy. Back in 2005, it was maybe 6-7 million tons a year, but today, we’re talking 200 million tons a year. So, naturally, ore grades are falling. Fifteen years ago, you were looking at an marginal grade of about 2%; five years ago, an marginal grade of 1.8%; a couple of years back, 1.6%; and now the marginal grade is as down to 1.4% and continuing to trend lower.
That grade compression is precisely why large-scale, long-life sulphide projects outside Indonesia are becoming strategically important again. Canada Nickel sits at the intersection of that shift. Its Crawford project in Ontario hosts one of the largest nickel sulphide resources globally.
As Indonesian marginal supply moves steadily down the grade curve and costs rise, high-tonnage, low-carbon sulphide assets in Tier-1 jurisdictions move from optional to essential, not just for price security, but for automakers and governments seeking secure, non-Chinese controlled, nickel supply chains.
The prolonged low-price environment created by Indonesia and China had a clear consequence: new nickel sulphide supply projects effectively stalled. With nickel prices so low, financing scarce, and cost curves rising, only a handful of sulphide projects were able to advance meaningfully. The short list is well known:
- Lifezone Metals at Kabanga in Tanzania
- Centaurus Metals in Brazil
- FPX Nickel in Canada
- as well as Canada Nickel, which is differentiated by scale and scope: the Crawford project has been formally designated under Canada’s Major Projects Office, and described by Prime Minister Mark Carney as a project that “will anchor Canada’s global leadership in clean industrial materials”. The company has published seven additional NI 43-101 compliant nickel resources within the Timmins Nickel District. And that record reflects execution through a weak price cycle, rather than reliance on a higher-price assumption
Conclusion
The nickel market is repricing not just supply cuts, but the realization that much of the surplus never existed. That adjustment could prove uneven through 2026, with the risk of overshoot as “paper” capacity is re-adjusted and physical balances tighten.
In the long-term, Indonesia has consolidated control of nickel supply supply during the 2024 trade war, and is now using that leverage to defend value. The shift is deliberate: from volume maximization to price discipline.
Despite the risks, Indonesia is working to put a floor under nickel prices, which means the only direction of travel for prices is up.
