Chinese nickel miners in Indonesia face threat from falling prices

A nickel rush in Indonesia by Chinese mining companies over the last decade may come to a halt as falling prices for the metal used in steel production make processing the material in the Southeast Asian country less attractive for China-based producers.

In September, China Baowu Steel Group, a giant state-owned producer, put on hold its plan to buy nickel assets in the Southeast Asia country from China's privately owned Tsingshan Holding Group in a deal that could be worth up to $4 billion. The two companies have been in negotiation for more than a year and the proposed deal has been under review by multiple ministries and regulators. Baowu sent its independent directors to inspect Tsingshan's operations in Indonesia in late September, but has not disclosed their findings.

Tsingshan has led a wave of Chinese mining operations in Indonesia that has helped the country become the world's second-largest stainless steel producer after China.

Chinese companies that already have a foothold in Indonesia now face additional challenges including changes in nickel processing technology and uncertainty over local government policy.