[Ferro-Alloys.com] Nickel smelter developers are putting projects on hold as they struggle to get financing with metal prices near their lowest in more than a decade, industry and government stakeholders said on Wednesday.

Indonesia was the world’s top exporter of nickel ore until 2014 when it banned shipments in an effort to push miners to develop downstream, or mineral processing, industries.

With abundant reserves of relatively high quality ore investors say there is potential for developing nickel smelters in Indonesia, but the current market is challenging.

Banks, primarily government banks, are allergic to providing support, credit and working capital etc to miners, Joseph Renyut, an advisor to smelter operator Cahaya Modern Metal Industri, told on the sidelines of a nickel industry conference in Jakarta.

Indonesia’s mining ministry has received applications for smelter permits from at least 30 companies but several of the projects have been postponed or delayed, a mining ministry official who asked to remain anonymous.

Several need refinancing because investors have stopped. Most are from China and China is in crisis, he said on Wednesday. If they are built they won’t be economical so they are waiting.

But he said the government still expects at least seven smelters to be built next year. Another official said the government expects to add at least 767000t of ferronickel production capacity in 2016. Nickel is extensively used to make stainless steel and other corrosion-resistant alloys.

Wahyu Prasetyo, deputy project manager at Karyatama Konawe Utama, a subsidiary of China Hanking Group, said his company wanted to expand from a pilot project to a 40000t high-grade ferronickel smelter in North Konawe, Sulawesi.

The big one is still under study because we’re trying to get the process cost lower than LME prices, he said, referring to London benchmark nickel prices. We’re struggling to get financing.

Titon Mineral Utama CEO Warsito Hans Tanudjaja said his company had also invested in a small-scale nickel pig iron smelter but was facing similar difficulties expanding and was also waiting for nickel prices to improve.

When the market comes back we’ll be more ready than the others, he said adding that his company needed LME nickel prices to climb above $10500/t.

LME nickel was not far from its weakest in more than a decade below $8850/t on Wednesday, following a more than 2% slide on Tuesday.

Complicated permitting and licencing issues coupled with uncertainties over rules and poor communication between central and regional levels of government are also holding back projects.

Lots of gymnastics needs to be involved for this to happen, Prime minerals COO Pawel Lis told us.

A 3.5-trillion rupiah smelter project in Halmahera is also waiting for government financing, an official at Indonesia’s state-owned miner PT Aneka Tambang Tbk told.

If we get lucky maybe we’ll get the last for this budget year, said Taofik Hidayat, Antam’s VP of risk management.

• [Editor:Juan]