Nickel’s Turning Point: Policy, Geopolitics, and Demand Converge to Tighten Supply

• Indonesia has moved from flooding the nickel market to actively managing supply, a shift that executives frame as structural, tied to royalty, quota, and pricing-formula changes since late 2025.
• Indonesian ore grades fell roughly 8% last year and are tracking toward another 4-5% decline this year, compounding supply tightness independent of deliberate policy restraint.
• MHP (Mixed Hydroxide Precipitate) production has dropped approximately 37% from its September 2025 peak, driven by sulphur import constraints tied to Strait of Hormuz shipping routes.
• Canada Nickel's Crawford project cleared its federal Decision Statement leaving financing as the primary remaining gate ahead of a targeted 2027 construction decision.
• Lifezone Metals confirmed a $37 million cash position and $930 million in Kabanga capital expenditure with more than $800 million in procurement packages already released to the market.

Nickel has spent most of the past decade priced as if Indonesia would supply the entire world indefinitely. That assumption is now breaking down. On a recent Crux Investor panel, Mark Selby, CEO of Canada Nickel Company, and Ingo Hofmaier, CFO of Lifezone Metals, discussed what a genuine shift in Indonesian supply policy means for price, physical market tightness, and the handful of Western-jurisdiction sulphide projects positioned to benefit. The conversation covered current price dynamics, supply-side tightness indicators out of Indonesia, the demand side the market keeps underweighting, and where their own two companies sit inside that picture.

Indonesia's Supply Discipline Is the New Base Case, Not a Blip

For years, Indonesian nickel pig iron and mixed hydroxide precipitate capacity, built cheaply with Chinese capital, kept a lid on prices and starved Western sulphide projects of capital. Both guests argued that era has ended. Hofmaier framed it as a structural reversal: nickel prices in the $18,000-19,000 per tonne range now represent Indonesia's own break-even and preferred operating band, not a floor the market will fall through again.

"There is a noticeable fundamental reversal of the trends that we have seen until the end of 2025. It's very clear that this shift has taken place and is the new base case that means we will not see prices like 15,000 again. We will most likely see prices of 18,000-19,000 which is the break-even point for even Indonesian projects," says Selby.

Selby's read is consistent: Indonesia has basically got all the levers they need to manage supply higher and manage prices higher through royalty changes, capped quotas, and a revised minimum price formula, and he expects them to keep using them over the next four to five years rather than reverse course.

Signs of Underlying Tightness

Beyond policy, both guests pointed to physical indicators that supply is tightening independent of any deliberate Indonesian restraint. Ore grades in Indonesia declined an estimated 8% last year and are tracking toward another 4-5% decline this year. Hofmaier added a less-discussed constraint: MHP production, which depends on imported sulphur burned domestically since Indonesia doesn't import sulphuric acid directly, has fallen roughly 37% from its September 2025 peak through the most recent figures. Four of the top five suppliers of sulphur to Indonesia sit on the wrong side of the Strait of Hormuz, adding a geopolitical wrinkle to an already-tightening input.

"We expect that the price could actually have upside risk quite significantly more than what you currently see in forward curves, and that of course depends a little bit on the situation in the Strait of Hormuz," Hofmaier states.

The Underappreciated Demand Story: Stainless Steel

Both guests pushed back on the market's tendency to frame nickel purely as a battery-metals story. Stainless steel, not EVs, is the larger and steadier demand driver, growing an estimated 4.6-4.8% annually and used across corrosion-resistant, high-temperature, and food-processing applications far beyond the battery supply chain.

Selby argued analyst models haven't caught up: nickel demand has grown at nearly 7% a year since 2019, and stainless steel at 5-6% a year for decades, yet forward models still default to roughly 3% growth. Neither guest expects a meaningful "green premium" for low-carbon nickel in the near term, citing intense price competition among EV manufacturers, though both said high ESG credentials help secure strategic capital and lending relationships even without a direct pricing benefit.

Corporate Developments

Canada Nickel: Crawford Nears Construction

Canada Nickel Company (TSXV:CNC) is advancing the Crawford nickel sulphide project in Ontario's Timmins district toward a targeted 2027 construction decision. The company received a positive federal Decision Statement for Crawford, the first mining project approved under Canada's amended Impact Assessment Act since 2019, external confirmation of the permits shortly language Selby used on the panel.

Financing is now the primary gating item: Selby described the remaining gap as another 10-20% of the project or offtake financing to complete the last little piece of the puzzle, with the full package targeted for early 2027. Strategic backers already in place include Anglo American, Agnico Eagle, and Samsung SDI, alongside the Taykwa Tagamou Nation, which invested $20 million of its own capital last year.

Lifezone Metals: Closing the Kabanga Financing Gap

Lifezone Metals (NYSE:LZM) is developing the Kabanga nickel-copper-cobalt project in Tanzania, distinguished by a grade profile well above typical Indonesian laterite deposits. Hofmaier cited an average grade above 2% nickel, with years in the 18-year feasibility study reaching 2.4%, plus copper, cobalt and payable silver as byproduct credits. On execution readiness, Hofmaier stated:

"We have around $930 million of CapEx and we have already released more than $800 million of procurement packages to the market. It was a bankable project last year, it's now a much higher margin project this year." 

He confirmed a $37 million cash position and $18.3 million still available under the company's Taurus standby facility. The next milestone is closing the equity component needed to reach a Final Investment Decision, which Hofmaier estimated would be followed by a build of two and a half years.

Key Takeaways

Indonesia's shift from flooding the nickel market to actively managing it is the structural thread connecting both companies' investment cases. Grade decline and sulphur-driven MHP constraints suggest the tightening is running ahead of what forward price curves currently reflect, and stainless steel demand growth, largely ignored relative to EV batteries, adds a second underappreciated pillar to the demand side. Canada Nickel's Crawford has now cleared its largest remaining regulatory hurdle and is primarily gated by financing; Lifezone's Kabanga carries higher-grade economics but a financing gap still to close ahead of FID. 

TL;DR

Canada Nickel and Lifezone Metals executives argue Indonesia has moved from oversupplying the nickel market to actively managing it through quotas and pricing, a shift they see as structural rather than temporary. Grade decline and sulphur-import constraints on Indonesian MHP production point to tightening ahead of what forward curves reflect, while stainless steel demand, growing steadily and largely ignored next to EV batteries, adds an underappreciated demand pillar. Crawford has cleared its federal Decision Statement and needs to close its final financing tranche; Kabanga offers higher grade but still needs equity financing closed ahead of FID. Neither guest expects a near-term green premium. As company executives, both have a direct financial stake in the nickel price outlook discussed.

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