Complexity of Risks in Nickel Downstreaming<\/span><\/h3>\nNickel downstream processing is more than just a conventional industrial process. It encompasses various stages, from mining and transporting raw materials, processing in smelters, and distributing processed products such as ferronickel, nickel matte, and battery precursors.<\/span><\/p>\nEach stage has a different risk profile:<\/b><\/p>\n\n- Mining Stage (Upstream):<\/span><\/li>\n<\/ol>\n
\n- Mine landslide or heavy equipment accident<\/span><\/li>\n
- Damage to conveyors and infrastructure<\/span><\/li>\n
- Disruption of fuel and electricity supply<\/span><\/li>\n<\/ol>\n
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\n- Processing Stage (Smelter and Refinery):<\/span><\/li>\n<\/ol>\n
\n- Risk of fire and explosion in furnace<\/span><\/li>\n
- Failure of cooling and electrical systems<\/span><\/li>\n
- Machinery breakdown<\/span><\/li>\n
- Risk of production downtime causing major losses<\/span><\/li>\n<\/ol>\n
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\n- Downstream and Logistics Stage:<\/span><\/li>\n<\/ol>\n
\n- Damage or loss during delivery of processed products<\/span><\/li>\n
- Risk of pollution or chemical spills during transportation<\/span><\/li>\n
- Supply chain disruptions due to extreme weather<\/span><\/li>\n<\/ol>\n
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\n- Financial and Reputational Risks:<\/span><\/li>\n<\/ol>\n
\n- Global nickel price fluctuations<\/span><\/li>\n
- Breach of long-term contract<\/span><\/li>\n
- Legal liability and environmental claims<\/span><\/li>\n<\/ol>\n
Without a strong risk management system and insurance protection, a single incident can cause millions of dollars in losses, disrupt operations, and even stop entire projects.<\/span><\/p>\n <\/p>\n
Risk Management Steps<\/span><\/h3>\nRisk management in the nickel industry must be carried out systematically and in an integrated manner. This process includes:<\/span><\/p>\n\n- Risk Identification<\/b><\/li>\n<\/ol>\n
The first step is to recognize potential hazards across all lines of operations.<\/span><\/p>\nL&G Insurance Broker assists companies through risk surveys and site assessments, including inspections of heavy equipment, electrical networks, fire protection systems, and workplace safety protocols.<\/span><\/p>\n\n- Risk Analysis and Assessment<\/b><\/li>\n<\/ol>\n
Once the risks are identified, the next step is to assess the potential magnitude of the loss and its frequency.<\/span><\/p>\nFor example:<\/span><\/p>\nFurnace failure can cause losses of IDR 50\u2013100 billion due to 2 weeks of downtime.<\/span><\/p>\nA fire in a raw materials warehouse could disrupt supplies for the entire production line.<\/span><\/p>\nL&G helps quantify these risks and prepares analysis reports that form the basis for insurance program design.<\/span><\/p>\n\n- Control and Prevention<\/b><\/li>\n<\/ol>\n
These steps include implementing a safety management system and worker training. L&G also provides technical recommendations such as:<\/span><\/p>\n\n- Instalasi automatic fire suppression system<\/span><\/li>\n
- Use of gas detectors in the smelting area<\/span><\/li>\n
- Routine safety audits and electrical system tests<\/span><\/li>\n<\/ol>\n
\n- Risk Transfer through Insurance<\/b><\/li>\n<\/ol>\n
Not all riskThis is where insurance becomes an important solution for transferring financial risk to insurance companies.<\/span><\/p>\nHowever, the policy design must be precise to cover all potential risks specific to the nickel industry. L&G’s role is to design a policy that truly fits the project’s needs and characteristics.<\/span><\/p>\n <\/p>\n
Types of Insurance Required in Nickel Downstreaming<\/span><\/h3>\nHere are some of the main types of insurance that companies in the nickel downstream sector must consider:<\/span><\/p>\n\n- Construction\/Erection All Risks (CAR\/EAR) Insurance<\/b><\/li>\n<\/ul>\n
Protecting smelter construction projects from the risks of fire, explosion, natural disasters, and worker errors during the construction period.<\/span><\/p>\n\n- Contractors\u2019 Plant and Machinery (CPM) Insurance<\/b><\/li>\n<\/ul>\n
Provides protection for heavy equipment such as cranes, excavators, and dump trucks from damage or accidents.<\/span><\/p>\n\n- Property All Risks (PAR) Insurance<\/b><\/li>\n<\/ul>\n
Protect fixed assets (buildings, furnaces, machines, electrical installations) from fire, explosions, or natural disasters.<\/span><\/p>\n\n- Machinery Breakdown (MB) dan Business Interruption (BI)<\/b><\/li>\n<\/ul>\n
Covers losses due to machine damage resulting in production stoppages and loss of income.<\/span><\/p>\n\n- Public Liability dan Environmental Liability Insurance<\/b><\/li>\n<\/ul>\n
Provides protection if the company causes damage to third parties or the surrounding environment.<\/span><\/p>\n\n- Marine Cargo Insurance<\/b><\/li>\n<\/ul>\n
Protects against risks during the transportation of raw materials and finished products from the factory to the port or customer.<\/span><\/p>\n\n- Employee Benefit dan Personal Accident Insurance<\/b><\/li>\n<\/ul>\n
Protecting the workforce who are the backbone of the company’s operations.<\/span><\/p>\nWith over 30 years of experience, L&G Insurance Broker has proven its ability to tailor a combination of insurance policies to the specific needs of heavy industries such as nickel, power plants, and oil and gas.<\/span><\/p>\n <\/p>\n
Case Study \u2013 Furnace Failure at a Nickel Smelter<\/span><\/h3>\nA nickel smelter in the Morowali industrial area experienced damage to its main furnace due to a power surge. This damage resulted in 18 days of production downtime and losses of over Rp120 billion.<\/span><\/p>\nHowever, thanks to the placement of Machinery Breakdown and Business Interruption insurance arranged by an experienced broker, the company managed to obtain full compensation according to the agreed claim value.<\/span><\/p>\nAs an accompanying broker:<\/span><\/p>\n\n- Prepare a claim report with complete technical data and evidence of damage.<\/span><\/li>\n
- Negotiate with the loss adjuster and insurance company to ensure the claims process runs smoothly.<\/span><\/li>\n
- Ensuring claims payments are made on time so operations can return to normal.<\/span><\/li>\n
- This is a real example of how the role of a professional insurance broker becomes a savior in a critical situation.<\/span><\/li>\n<\/ol>\n
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