Vale Indonesia’s Sustainability Efforts and Joint Ventures Set to Drive Future Profits

JAKARTA, RAKYAT NEWS – The gian mining PT Vale Indonesia Tbk (INCO) remains optimistic about its long-term prospects despite facing a predicted 26% decline in profits for 2024 and a 32% decrease for 2025. The projected dip is largely due to margin pressures within the nickel matte segment.

However, Vale Indonesia’s long-term growth potential is expected to be driven by several key factors. These include additional revenue from the sale of saprolite ore, joint venture (JV) income from the high-pressure acid leach (HPAL) smelter, and positive sentiment surrounding sustainability practices in collaboration with Ford.

According to research from RHB Sekuritas, the additional revenue from these ventures is anticipated to materialize by the end of 2026. This could help counterbalance the impact of revised profit estimates. The company’s strategy involves diversifying its revenue sources to ensure stability in the long run.

Despite uncertainties in nickel prices, which are currently at USD 16,800 per ton (year-to-date), with projections of USD 16,500 per ton next year, Vale Indonesia faces operational challenges. One of the significant challenges is the decreasing availability of saprolite ore, which has led to higher ore prices.

Vale Indonesia is focusing on preserving its ore reserves, including lower-quality materials. This effort slightly increases operational costs but ensures a stable output. While margin pressures persist, the company’s cash costs remain favorable, estimated at USD 9,000 to 10,000 per ton, compared to the average selling price (ASP) of nickel matte, which is around USD 12,500 per ton.

Looking ahead, Vale’s construction of the HPAL plant is expected to be completed by the end of 2026. This new facility is expected to generate additional JV revenue of approximately USD 150 million, starting in 2027, based on INCO’s minority stake in the projects. The successful completion of this project will significantly contribute to Vale’s future revenue streams.