PT Vale Indonesia produced 18,341 metric tons of nickel matte in the third quarter, its highest quarterly output of 2026 and about 14% more than in the April-to-June period, but lower nickel prices and rising energy costs cut its quarterly net profit by 29.7% to $42.75 million, according to results the Jakarta-listed miner released on Oct. 29.

For investors in Asia, the numbers show how Indonesia's nickel producers are being squeezed from two sides. Prices for the battery and stainless-steel metal remain soft, while government-set mining quotas cap how much ore companies can dig. Vale Indonesia, which trades on the Indonesia Stock Exchange under the ticker INCO, is also partway through a multibillion-dollar push into processing plants that will need far more ore than it mines today.

Vale Indonesia output recovers after maintenance

The quarterly rebound followed major maintenance work in the second quarter at the company's Sorowako operation in South Sulawesi, along with better equipment availability and steadier running, Argus Media reported, citing the company's quarterly report. Output in the second quarter had been 16,153 tons, according to Kontan, so the increase was 13.5%.

The recovery did not make up for the earlier shortfall. Nickel matte production for the first nine months totaled 48,114 tons, down 12.5% from 54,975 tons a year earlier, Kontan reported. Third-quarter output was also below the 19,391 tons produced a year earlier, Argus reported. Argus gave the quarterly figure as 18,314 tons, but the 18,341 tons reported by Kontan, Katadata and Bisnis.com matches the nine-month total once first-quarter output of 13,620 tons and second-quarter output of 16,153 tons are subtracted.

Shipments rose faster than production as the company drew down stock. Vale Indonesia delivered 20,158 tons of nickel matte in the third quarter, up 44.7% from 13,932 tons in the prior three months.

The bigger change came from ore. The company sold about 1.73 million wet metric tons of nickel ore in the quarter, up 10% from the second quarter, according to Argus. Sales from the Pomalaa block in Southeast Sulawesi jumped to 1.31 million wet tons from 495,601, while sales from the Bahodopi block in Central Sulawesi fell 61.4% to 415,000 wet tons, Kontan reported.

Those ore sales are the main reason the nine-month numbers look strong. Revenue for January through September rose 27% to $896.07 million, and net profit climbed 180.5% to $147.12 million from $52.45 million a year earlier, according to Kontan. Earnings before interest, taxes, depreciation and amortization rose 78.9% to $297 million. Katadata, rounding the same figures, put the profit gain at 183%.

Prices fall as costs rise

The quarter itself was weaker. Revenue rose 21.6% from the second quarter to $353 million on the higher shipments, but EBITDA fell 12.9% to $101 million.

The average realized price for nickel matte slipped 4.8% to $14,053 a ton from $14,765, Kontan reported. Cash cost per ton rose 4% to $10,404, which the company tied mainly to higher energy prices and consumption. Use of marine fuel oil rose 6% and coal use rose 12%, according to a Bisnis.com report republished by the Indonesian Mining Association.

That leaves a gap of about $3,650 a ton between realized price and cash cost, down from about $4,760 in the second quarter. The company said in its release that higher volumes and efficiency efforts helped it hold up performance against pressure from nickel prices and energy costs, Kontan reported.

Global nickel prices have been held down by heavy Indonesian supply. Jakarta has signaled it may tighten nickel ore quotas for 2027 to support the market, which would affect both prices and the volume Vale Indonesia is allowed to mine.

Cash builds for Pomalaa HPAL and smelter projects

Vale Indonesia is spending heavily on high-pressure acid leach plants, which turn low-grade laterite ore into intermediate products used in electric-vehicle batteries. Lines 1 and 2 of its Pomalaa HPAL project have reached first mechanical completion, the company said.

Capital spending in the third quarter was about $95 million, and the company drew down a $175 million bank loan. Cash and equivalents more than doubled to $247.31 million at Sept. 30 from $110.66 million at the end of June, according to Kontan.

Quotas remain the main constraint. In January, Vale Indonesia became the first Indonesian nickel miner to publicly confirm approval of its 2026 work plan and budget, known as the RKAB, after a brief mining halt while it waited for the permit, Argus reported. Chief Executive Bernardus Irmanto said at the time that the approved volume was “around 30% of what we requested,” according to Mining Weekly, and that it would likely fall short of what its new plants need. He asked parliament to support an additional ore quota.

Mining Weekly reported in January that the $4.5 billion Pomalaa plant was expected to start up in August, with the Bahodopi project due for completion in the fourth quarter and Sorowako processing to follow in 2027. In its third-quarter release, it reported mechanical completion at Pomalaa rather than commercial output.

For 2027, Vale Indonesia said it plans to optimize nickel matte output, raise ore sales from its growth blocks and continue its downstream projects, Kontan reported. The next marker for investors is the government's decision on 2027 RKAB quotas, which will set how much ore the company can feed into Pomalaa once the plant is running.