Indonesia nickel mining disrupted by heavy rain, floods...

Indonesia nickel mining disrupted by heavy rain, floods -association
https://www.*****.com/news/2019-06-14/Indonesia-nickel-mining-disrupted-by-heavy-rain-floods-association.html

JAKARTA/SINGAPORE, June 14 (Reuters) - Widespread floodingin Indonesia's nickel hub on the island of Sulawesi has haltedsome mining operations in the world's biggest nickel oreproducer, an official with a nickel mining industry group said.

Indonesia is a major supplier of nickel ore and nickel pigiron to China, the world's largest producer of stainless steel,an industry that accounts for 70% of global nickel consumption.A protracted disruption in Indonesia could have a significantimpact on raw materials for stainless steel production.

Heavy rains have been hitting the North Konawe regency inSoutheast Sulawesi since late last month, flooding some minesand resulting in high water content in output from others, MeidyLengkey, secretary general of Indonesia's Nickel MinersAssociation, told Reuters.

"A number of mines haven't been able to operate in the pasttwo weeks," Lengkey said. An estimated 15 to 20 miners who eachproduce 50,000 to 100,000 tonnes of nickel ore per month, wereaffected by the flooding, she said.

More than 5,700 people were displaced after high intensityrain in North Konawe region caused a widespread flood, thenational disaster mitigation agency said

The flooding, however, has not disrupted operations andlogistics at Indonesia Morowali Industrial Park, a major nickelsmelter hub in Central Sulawesi, according to Alexander Barus,an executive at the park.

"We anticipated a heavy rainy season, but this one is biggerand more widespread than usual," Barus said.

Many of Indonesia's nickel mines are spread around Central,South and Southeast Sulawesi provinces. The Morowali IndustrialPark is where China's Tsingshan Group makes stainless steel.

Morowali was also affected by floods, but the worst hit areawas just to the south of there, in North Konawe regency.

FUTURES PRICES JUMP

Nickel prices jumped to two-week highs on Friday on fears offurther supply disruptions.

Benchmark nickel on the London Metal Exchange (LME)on Friday rose as much as 1.9% to a two-week high of $12,065 atonne, while Shanghai nickel climbed 3% to its highestsince May 28 at 101,360 yuan ($14,640) a tonne. Short positions on Shanghai July nickel have been squeezedby the increase, with the market just needing "an incident tomake prices fall," said a China-based nickel analyst.

Nickel futures have been under pressure and are likely toremain so this year on rapidly rising nickel supplies andslowing demand from stainless steel mills, which have beenerasing deficits in the nickel stockpile balance. Another major influence this year has been the trade disputebetween the United States and China, the world's two largesteconomies, with its potential to disrupt growth and demand.Benchmark LME nickel has fallen about 25% in the last 12 months.

"We remain bearish about near term nickel prices in view ofweak stainless steel demand especially in China," said analystHelen Lau of Argonaut Securities in a note.

The Southeast Sulawesi disaster mitigation agency said onFriday that water has receded in some areas in North Konawe,although some villages were still difficult to access.

($1 = 6.9233 yuan)

(Reporting by Bernadette Christina Munthe and Fransiska Nangoyin JAKARTA and Mai Nguyen in SINGAPORE; Editing by Tom Hogue)

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