Summary of Conference Call on Indonesia Nickel Industry Industry Overview - The focus is on the nickel industry in Indonesia, particularly regarding the regulatory framework surrounding nickel ore quotas (RKAB) and its implications for market dynamics and pricing. Key Points and Arguments Nickel Ore Quota Expectations - There is a rising perception of a tighter nickel ore quota (RKAB) for Q126, which has contributed to strong nickel share price performance, outperforming the Jakarta Composite Index (JCI) by 25% [1] - The Ministry of Energy and Mineral Resources' ruling suggests that miners can operate under previously approved RKABs until March 2026, with a decision on the 2026 RKAB expected by the end of Q126 [1] Potential RKAB Cuts - Seven reasons indicate that gradual RKAB cuts could be on the horizon, with adjustments expected in H226 due to the RKAB revision deadline of July 31, 2026 [2] - The ruling aims to manage national receipts in light of lower commodity prices, allowing flexibility in adjusting RKAB based on supply-demand forecasts [2] Supply Shortage Concerns - Initial headlines suggested a potential 70 million wet metric tons (wmt) nickel ore shortage in 2026, which could lead to a global nickel deficit [3] - However, the actual shortage may be overestimated due to Indonesian miners' ability to import nickel ore, with import prices rising as volumes increased to an estimated 15 million wmt last year [3] Beneficiaries of RKAB Dynamics - Specific miners and ore types are expected to benefit from the RKAB dynamics, with Vale Indonesia (INCO) identified as well-positioned for matte/ore sales [4] - Other miners like Antam (ANTM), Merdeka Battery (MBMA), and Harita (NCKL) may also catch up, with significant EPS revisions anticipated for 2027 and 2028 [4] Additional Important Insights - The report refrains from adjusting 2026 EPS estimates pending further RKAB details, but anticipates substantial revisions for 2027 and 2028 based on updated nickel price forecasts [4] - Risks to the nickel sector include lower-than-expected nickel prices, increased supply, and regulatory delays, which could impact employment and foreign direct investments (FDIs) [8] - The valuation methodologies for various companies (INCO, MBMA, ANTM, NCKL) are based on sum-of-the-parts (SOTP) and discounted cash flow (DCF) analyses, highlighting the importance of project execution risks and market conditions [9][10][11][12] Conclusion - The Indonesian nickel industry is at a critical juncture with regulatory changes impacting supply dynamics and pricing. Investors should closely monitor RKAB developments and market conditions to assess potential investment opportunities and risks.

Core Insights - Eramet's turnover decreased by 10% in Q3 2025, amounting to €720 million, primarily due to a negative price effect of 25% and logistical challenges, despite a positive volume effect of 22% [6][20][30] Financial Performance - Adjusted turnover for manganese activities fell to €421 million, down 26% year-on-year, with manganese ore turnover declining by 35% to €221 million [17][21] - Nickel activity saw a significant increase, with adjusted turnover rising to €142 million, a 122% increase compared to Q3 2024, driven by a 567% increase in external nickel ore sales [38][39] - Mineral sands turnover decreased by 32% to €51 million, reflecting price pressures and a slight decrease in ilmenite volumes sold [55] Operational Challenges - Manganese ore transportation volumes declined by 13% to 1.6 million tonnes due to operational challenges on the rail network [21][31] - The company is facing a highly uncertain macroeconomic environment, which is negatively impacting demand and cash generation [6][20] Production and Sales - Lithium carbonate production ramped up significantly, reaching 2,080 tonnes in Q3 2025, with sales of 1,000 tonnes [66][72] - Nickel ore production in Indonesia increased to 12.3 million wet metric tonnes, with external sales volumes rising to 9.3 million wet metric tonnes [38][48] Market Trends - Global manganese ore consumption increased by 8% in Q3 2025, driven by sustained manganese alloys production, particularly in China [26] - The price index for manganese ore averaged $4.3/dmtu in Q3 2025, down 40% compared to Q3 2024, reflecting unfavorable comparatives [28] Strategic Initiatives - The company has initiated a performance improvement program focusing on safety, operational excellence, and financial resilience [5][6] - A revised Capex plan for 2025 is set between €400 million and €425 million, down from previous estimates [81] Outlook - The outlook for Q4 2025 indicates a continued decline in global carbon steel production, which is expected to impact manganese ore demand [35] - The lithium market is anticipated to remain in surplus, with prices under pressure, despite strong demand driven by electric vehicle sales [70][73]

Supply Chain Dynamics - Philippine nickel ore shipments to Indonesia are projected to increase significantly in the current year [1] - The surge in shipments aims to satisfy the demand from Chinese-owned refineries [1] - This demand is driven by Indonesia's restrictions on its domestic nickel production [1]