ASIATODAY.ID, JAKARTA – Indonesia is tightening control over nickel production in 2026 as the world’s largest nickel producer seeks to prevent oversupply, support market stability, and ensure sufficient raw materials for its rapidly expanding downstream industry.
The Ministry of Energy and Mineral Resources (ESDM) has set Indonesia’s 2026 nickel production quota at around 250 million to 260 million tonnes, a significant reduction from the 379 million tonnes approved for 2025.
The move reflects Jakarta’s effort to manage supply growth after years of aggressive expansion in nickel mining and processing, driven by global demand for electric vehicle (EV) batteries, stainless steel, and critical minerals.
Indonesia has become a central player in the global nickel supply chain, accounting for more than half of the world’s nickel production and attracting billions of dollars in investment for smelters and battery-related industries.
Balancing Global Prices and Industrial Growth
Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources Tri Winarno said the government would maintain strict control over additional nickel production allocations in 2026.
“There will be no increase or additional nickel production quota in 2026, except to meet the needs of domestic smelters that still face raw material shortages,” Tri said.
He added that any additional quota would be granted selectively and measured carefully to avoid excessive supply that could weaken nickel prices.
The policy comes as Indonesia attempts to balance two competing priorities: maintaining commodity price stability while ensuring that its downstream processing industry continues to operate efficiently.
Supply Shortage Risks for Smelters
The Institute for Development of Economics and Finance (INDEF) warned that securing nickel ore availability remains critical for the success of Indonesia’s downstream industrial strategy.
Andry Satrio Nugroho, Head of INDEF’s Center of Industry, Trade and Investment, said the quota adjustment reflects the challenge of managing supply without disrupting industrial operations.
“The policy direction can be understood as a correction after previous quota tightening. The challenge is that limiting supply to support prices must be balanced with the need to keep smelters running,” Andry said.
He estimated that Indonesian smelters would require around 340 million to 360 million tonnes of nickel ore in 2026, while the government’s approved production plan remains around 260 million to 270 million tonnes.
This could leave a potential supply gap of 60 million to 100 million tonnes, depending on industrial utilization levels.
Pressure on Nickel Processing Industry
Andry warned that prolonged raw material shortages could reduce smelter performance across Indonesia.
Smelter utilization, which previously approached 90 percent, is projected to decline to around 70–75 percent in 2026. Some production facilities could operate below half of their capacity if ore supply constraints persist.
“If the relaxation only provides a small additional quota, it will not be enough to address a shortage measured in tens of millions of tonnes,” he said.
INDEF said Indonesia needs stronger coordination between mining approvals and smelter development plans to prevent mismatches between processing capacity and available resources.
“Mining quotas and smelter development must be planned within an integrated framework. Otherwise, supply shortages will continue to emerge,” Andry said.
Stricter Mining Governance
To maintain production discipline, the government has allowed mining companies to submit revisions to their annual Work Plans and Budgets (RKAB) until 31 July 2026.
The revision process will prioritize companies that comply with regulatory requirements, including good corporate governance (GCG) standards and responsible mining practices.
Authorities are also strengthening oversight of export compliance and financial obligations related to mineral trading activities.
Through tighter production controls, improved governance, and better coordination between upstream mining and downstream processing, Indonesia aims to preserve its influence in the global nickel market while supporting its ambition to become a major hub for EV battery manufacturing. (AT Network)
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