Nickel Price Projection Using Multivariate Regression Method and Investment Feasibility Analysis of Nickel Mining in Indonesia with Sensitivity Analysis and Monte Carlo

Abstract

Nickel is one of the metals commonly used in various industries. Indonesia is one of the countries that has the largest nickel reserves in the world. Nickel prices will be formed through an equilibrium mechanism between production supply and nickel demand. This study will analyse the relationship between nickel price formation, supply, and demand. Nickel prices will also affect the feasibility of nickel mining investment in Indonesia. The data used in this study consists of market data derived from historical reports of the last 5 – 12 years (2010 – 2022) and mining plan assumptions derived from benchmarks with similar industries. The methods used in this analysis are multivariate regression, discounted cash flow, sensitivity analysis, and Monte Carlo simulation. The results of the analysis that have been carried out show the relationship between nickel supply and demand with prices, with estimated nickel price projection ranging from $16,750 / Ton – to $18,927 / Ton. The factors that most influence the feasibility of mining investment are nickel price, sales realization, water content, contractor costs, and fuel costs. The risk of nickel mining investment in Indonesia based on Monte Carlo simulations is estimated at around 11.36%. This shows that nickel mining investment in Indonesia is still very attractive.