Investing.com -- Nickel prices on the London Metal Exchange (LME) have risen by 0.3% to $16,550 and are nearly 3.5% higher on the week.
The rally in nickel prices comes as the market reacts to developments in Indonesia, the world’s largest nickel producer. The Indonesian government is currently contemplating a significant increase in mining royalties.
This change would have a notable impact on nickel and copper producers in the country, according to a note from Neil Welsh of Britannia Global Markets. The proposed hike could see royalties rise from the current 10% to a range of 14%-19%, substantially increasing operational costs for miners.
While the proposal is still under review, the nickel market has already begun to adjust. Expectations of higher production costs are being factored into prices, Welsh noted.
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