Australian miner South32 ( SHTLF ) has agreed to sell its Cerro Matoso ferronickel mine in northern Colombia to an industrial conglomerate, CoreX Holding, in a deal valued at up to $100 million.

The agreement includes a nominal upfront payment, with additional payments tied to future nickel prices and production performance, as well as up to $20 million in permitting milestone bonuses over the next five years.

Cerro Matoso, located in Córdoba, Colombia, is one of the leading global open-pit ferronickel operations but has struggled amid the weakening market. South32 ( SHTLF ) reported a 6% drop in nickel output in the nine months ending March 2025 due to lower planned grades. The firm will also record a $130 million impairment loss, which will be excluded from the company's underlying earnings.

"The deal supports our strategy to streamline the portfolio and focus on higher-margin commodities essential for the green transition, such as copper and zinc," South32 ( SHTLF ) said in a statement. The Perth-based miner continues to operate major assets across Australia, South Africa, and South America, focusing on copper and zinc.

The asset sale is unsurprising, given the recent nickel market dynamics. Prices have plummeted due to massive output from Indonesia, the world's top producer. Following the highs of $48,000 per ton reached in early 2022, prices dropped as low as $13,865 per ton in April.

Even China's Tsingshan Holding Group suspended multiple smelting lines at its Morowali facility in Central Sulawesi in May 2025, placing them under open-ended maintenance.

Macquire analyst Jim Lennon expects the surplus to continue until 2027-2028. "The market is in oversupply, and in Indonesia, several projects in the pipeline will be completed soon, increasing production capacity," he said at the May Shanghai Metals Market conference in Jakarta, according to Reuters.

However, some leading industry names oppose this stance. Veteran resource investor Rick Rule sees a turning point for Indonesia. "The environmental degradation in Sulawesi won't be tolerated much longer," he noted in a recent interview.

Rule has long favored high-grade sulfide nickel over Indonesia's laterite deposits, citing their lower energy intensity. "As oil prices rise over the next two to three years, the cost of laterite nickel will soar," he warned.

Some backlash is already materializing. AP News reported that last month, the Indonesian government suspended nickel mining in Raja Ampat—an ecologically fragile archipelago often referred to as the "Amazon of the seas." Violations included illegal mining on protected islands, pollution, and unpermitted land use.

Rule remains bullish, taking a contrarian stance but preferring quality over scale. "Sulfide nickel has made me a lot of money. In natural resource investing, you're either a contrarian or you're going to be a victim," he concluded.

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