Vale Explains Strategy to Maintain Profits Amid Nickel Price Normalization

JAKARTA - PT Vale Indonesia Tbk (INCO) revealed a number of the company's strategies for maintaining the selling price of nickel, which has recently continued to decline.

Chief Financial Officer (CFO) Vale Indonesia, Bernardus Irmanto, admitted that the selling price of nickel has decreased in recent times to 16 thousand US dollars per ton. Even though selling prices have decreased, production prices have also decreased. In the last 3 months, production costs have fallen to 9 thousand US dollars.

"Indeed, the nickel price trend is currently falling, even reaching 16 thousand (US dollars), but our unit cost is also in a downward trend, even in the last 3 months it has been below 10 thousand, around 9 thousand. So if you want to breakevent "The nickel price should be around 12-13 thousand," he said at the 2023 Public Expose Live Press Conference, quoted Thursday, November 30.

For this reason, he said that even though the selling price had decreased, INCO's margin was still in the safe zone because he also predicted that the nickel price would not fall until it reached 13 thousand US dollars per ton.

"I do not expect nickel prices to fall below 13 thousand taking into account several current factors," he said.

However, continued Bernardus, INCO will continue to strive for efficiency in nickel production activities so that unit costs can be maintained at a level that remains profitable for the company.

He emphasized that the company's production costs are still at the level of 10 thousand US dollars and as much as 25 percent is still contributed by energy costs.

For this reason, several strategies carried out by INCO include optimizing the blending of energy resources from oil and coal and other energy sources.

"We try to optimize everything," he added.

Second, INCO will also gradually reduce energy consumption and this will continue to be measured from time to time.

Meanwhile, the final strategy is to get other, more competitive energy sources.

"From these three initiatives, we hope that production costs, especially energy, which represents around 30-35 percent of production costs, can be maintained at an efficient level so that existing margins can be maintained," concluded Bernardus.