ASIATODAY.ID, JAKARTA – Indonesia’s nickel industry is at a critical juncture. Several Chinese-owned smelters have ceased operations in the country due to global price pressures, social unrest, and efficiency challenges.
In response, the Indonesian Nickel Miners Association (APNI) is calling for a comprehensive reform of national nickel policies to ensure long-term competitiveness and investment sustainability.
Meidy Katrin Lengkey, Secretary General of APNI, emphasized that Indonesia must realign its downstream nickel strategy to avoid falling into a damaging boom-bust cycle that could hurt investors and the economy alike.
“We can’t keep expanding capacity without a market-driven roadmap. It’s time for production control and a demand-based downstream policy,” Meidy stated in an official release, July 31, 2025.
Global Oversupply Risks Loom as Indonesia Dominates Production
Indonesia currently accounts for over 50% of global nickel supply, primarily through RKEF and HPAL smelters. However, research shows that this production surge has not been matched by demand growth, especially from electric vehicle battery and stainless steel sectors.
According to FERROALOY data, Indonesia’s Nickel Pig Iron (NPI) output continues to soar, while contributions from Ferro-nickel (FeNi)—a higher-value product—remain marginal. This highlights the dominance of a volume-based expansion strategy without adequate assessment of global market needs or economic viability.
With global nickel prices sliding on the LME and SMM exchanges, many smelters now operate below economic viability. Profit margins are shrinking, tax burdens are increasing, and regulations such as the annual RKAB (Work Plan and Budget) are seen as insufficiently adaptive for long-term investment planning.
APNI’s 6 Key Policy Recommendations
To address the current crisis, APNI has outlined six policy proposals to restructure and future-proof Indonesia’s nickel industry:
1. Moratorium on new smelter construction until market balance is restored
2. Extension of RKAB validity to three years for greater investment stability
3. Reform of HPM/HMA pricing formulas to reflect real production costs and market fluctuations
4. Development of a downstream roadmap based on global demand trends
5. National ESG standards to enhance export market access
6. Incentives and market diversification schemes for high-value, sustainable projects
“With the right policy interventions, Indonesia can escape the boom-bust trap and build a nickel industry that is resilient, competitive, and future-oriented,” Meidy added.
Four Chinese Smelters Shut Down, Over 1,200 Workers Affected
The need for reform is further underlined by the shutdown of four major Chinese-owned smelters in Indonesia as of the first half of 2025. These include:
1. PT Gunbuster Nickel Industry (GNI) – Owned by Chinese investor Tony Zhou Yuan
2. PT Huadi Nickel Alloy Indonesia (HNAI) – 51% held by Shanghai Huadi, 49% by Duta Nickel Sulawesi
3. PT Indonesia Tsingshan Stainless Steel (ITSS) – Owned by Tsingshan Holding, Ruipu Technology, Tsingtuo Group, Hanwa Co., and PT IMIP
4. PT Virtue Dragon Nickel Industry (VDNI) – A subsidiary of Jiangsu Delong Nickel Industry Co., Ltd
A notable case is PT HNAI in Bantaeng, South Sulawesi, which halted all operations on July 15, 2025. According to labor union reports, over 1,200 workers were laid off, although company management has denied mass layoffs and claims the information is misleading.
“Operations at HNAI have been suspended indefinitely, and employees were asked to wait for further notice,” said Djoko Widajatno, Senior Advisor at APNI.
A Call for Smarter, Greener Investment
APNI underlines that reform is not about restricting growth, but about creating space for higher-quality investments—especially in value-added downstream sectors, clean technology, and projects aligned with global ESG standards.
Indonesia will remain a central player in the global nickel supply chain, but the future lies in strategic, sustainable, and selective development. (AT Network)
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