Cobalt price discounts are squeezing nickel mining profits in Indonesia, cutting the payable to 67% from 90%

Cobalt discounts squeeze nickel mining profits in Indonesia

Cobalt price discounts are cutting into nickel mining profits in Indonesia, and the pressure has barely started. Reuters reports that Chinese battery material buyers now pay only 67% of the benchmark cobalt metal price for the cobalt riding inside mixed hydroxide precipitate, a partly refined nickel and cobalt product Indonesian plants export. That share, called the cobalt payable, was about 90% in early August 2026, a level traders and producers themselves called unusually high. CATL own materials arm, Brunp, struck deals at that same 67%. CNGR Advanced Material paid around 70%, and the trader Xiamen Xiangyu was among the first to accept 75%, undercutting the earlier rate.

Chinese cobalt intermediate imports from the Democratic Republic of the Congo also fell hard. Buyers brought in 15,970 metric tons in July 2026, about 67% below the 48,745 metric tons bought in July 2024 and nearly 70% below January 2025. Traders have absorbed the squeeze so far, but Reuters reports the pressure is about to reach Indonesia own nickel processing plants once the next quarter of supply contracts is negotiated, and could push higher cost producers to cut output.

How much of the world nickel supply sits inside Indonesia

The timing matters because of how much of the world nickel supply now comes from 1 country. The United States Geological Survey, the government agency that counts mineral production, puts Indonesia own 2025 mined nickel output at an estimated 2,600,000 metric tons, 13% above 2024, against a world total of 3,900,000 metric tons that same year. Dividing those 2 government numbers puts Indonesia at about 67% of the world mined nickel in 2025, a concentration Ingo Hofmaier, chief financial officer of Lifezone Metals, a company developing a nickel project in Tanzania, says could keep climbing.

If the development continues in Indonesia, you will have 75 to 80% of production.

Ingo Hofmaier, chief financial officer of Lifezone Metals. Source 4.

Nickel producers already face rising costs

Indonesian nickel producers were already facing rising costs before the cobalt discount widened. The government raised the correction factor built into its official nickel ore price formula on 2026 04 15, and market participants told The Metalnomist the change adds more than 1,000 dollars a metric ton of nickel metal equivalent to the cost of producing mixed hydroxide precipitate. Skillings put the added cost to nickel pig iron producers, a different, cobalt free product, at about 500 dollars a metric ton of nickel. Bernstein Research figures carried by Crux Investor show the industry own cash cost of producing nickel climbing to between 17,870 and 18,650 dollars a metric ton in July 2026, up from 14,650 to 15,300 dollars a metric ton a year earlier, and the International Nickel Study Group has revised its 2026 global nickel balance from a surplus of 283,000 metric tons to a deficit of 32,000 metric tons.

A reader who thinks of cobalt and nickel as 2 separate stories has not yet seen how a trading term struck by a Chinese battery maker can now move the economics of an Indonesian mine.