Metal Mining
Revised 2026 HPM Reshapes Nickel Ore Economics
- Latest MEMR decree shifts nickel ore HPM to a multi-variable formula, lifting the regulatory floor and narrowing the gap.
- Upstream miners gain pricing power, while downstream ore buyers face higher feedstock cost and royalty-base risk.
- We continue to prefer upstream ore-levered names, with ANTM> INCO> NCKL> MBMA as our top picks.
HPM 2026 Marks a Structural Reset in Nickel Ore Pricing
The issuance of MoEMR Decree No.144.K/MB.01/MEM.B/2026, effective 15 April 2026, marks the most substantive revision to Indonesia’s nickel ore pricing regime since HPM was introduced. Unlike Decree 268/2025, which linked nickel ore HPM solely to nickel grade (%Ni x CF x HMA Ni), the new framework adopts a multi-component formula that explicitly incorporates iron, cobalt, and chromium by-products, with additional adjustments for moisture content. This materially narrows the gap between regulated and economic value. Meanwhile, the increase in baseline Correction Factor to 30% at 1.6% Ni (vs 20% at 1.9% Ni previously), effectively lifts the ore floor price across the grade curve, signaling a clearer policy push to enhance state take and strengthen domestic miners’ bargaining position.
By-Product Credits Drive Ore Divergence
The most important feature of HPM 2026 is its by-product credit structure, which creates differentiated economic outcomes for saprolite and limonite rather than treating laterite ore uniformly by nickel grade alone. For saprolite, typically at around 1.6% Ni and Fe at or below 35%, the revised formula allows iron to contribute through 30% CF on lateritic iron ore HMA, lifting ore value beyond the nickel component alone. For limonite, where Ni is usually 1.0–1.3% and Fe often exceeds 35%, iron is generally excluded, but cobalt can still provide support when Co content is above the 0.05% threshold. In our view HPM 2026 makes the regulated benchmark more relevant as an effective transaction floor, particularly for lower-grade ore where historical smelter discounts have been deepest.
Upstream Miners Remain Potential Beneficiaries
From a sector perspective, the government is the clearest beneficiary of the new HPM, as the revised framework strengthens pricing discipline, broadens the fiscal base, and reduces the scope for aggressive underpricing in related-party transactions. At the corporate level, we see upstream ore sellers as the primary winners, given their greatest leverage to a higher regulated floor price, particularly in a tightening physical market. Within this framework, we retain our sector picks as follows: ANTM> INCO> NCKL> MBMA as its upstream benefits should partly offset downstream cost exposure, while downstream earnings risk remains selective and mainly tied to ore self-sufficiency, transfer-pricing structure, and pass-through ability.
… Read More 20260417 Metal Mining
