ASIATODAY.ID, JAKARTA – Indonesia should, in theory, hold the key to global nickel price formation. With control over around 42 percent of the world’s nickel reserves and accounting for more than 60 percent of global supply, the country is not merely a major player—it is a structural heavyweight in the international nickel industry.
Yet reality tells a different story. Instead of acting as a price maker, Indonesia remains trapped as a price taker.
Ironically, massive investment inflows and aggressive expansion of the domestic nickel industry have backfired: oversupply has flooded global markets, pushed nickel prices downward, and eroded Indonesia’s export value.
This contradiction raises a fundamental question: why has a country with the world’s largest nickel reserves failed to control global prices?
Oversupply Pressures Global Prices
A report by research institute Transisi Bersih, titled Controlling Nickel: From Price Taker to Price Maker, identifies the root of the problem. Rapid production growth, unmatched by supply controls, has created structural oversupply in global markets.
Transisi Bersih Executive Director Abdurrahman Arum argues that Indonesia’s current nickel management strategy is counterproductive to national economic interests.
“Indonesia has flooded the market with excessive production. As a result, nickel prices have fallen and national value creation has evaporated. Economically, Indonesia has the power to regulate the market—but it is not using it,” he said on January 15, 2026
Depressed prices not only weaken state revenues, but also narrow fiscal space at a time when Indonesia aims to position nickel as the backbone of the global energy transition and the electric vehicle industry.
Uncontrolled Downstreaming, ESG Becomes the Casualty
The problem extends beyond economics. Aggressive nickel expansion has triggered serious environmental damage, ranging from deforestation and coastal degradation to social conflict in mining regions.
Transisi Bersih records show tens of thousands of hectares of forest loss in major nickel-producing areas, driven by mining activity and smelter development with weak environmental, social, and governance (ESG) standards.
This underscores a critical reality: downstream industrialization without production control not only fails to generate optimal value-added, but also amplifies long-term environmental and social costs.
The “Control and Leverage” Strategy: A Path to Price Leadership
Transisi Bersih recommends a “control and leverage” strategy as the key pathway for Indonesia to transition from price taker to global nickel price maker.
Under this approach, Indonesia could potentially double global nickel prices to a range of USD 26,000–36,000 per metric ton (approximately IDR 438–606 million) within three to five years.
If implementation begins in 2026, policy impacts are expected to materialize between 2028 and 2030, with additional annual state revenues projected at up to IDR 369 trillion.
Four Key Steps to Control Global Nickel Prices
To realize this ambition, Transisi Bersih outlines four strategic measures:
1. Tightening Production Quotas
Setting national production caps for three to five years to eliminate global supply surpluses.
2. Progressive Export Taxes
Introducing export taxes of 10–35 percent, adjusted in line with global nickel price movements.
3. Ending Fiscal Incentives for New Smelters
Revoking tax holidays and tax allowances, as Indonesia’s market dominance is deemed strong enough to attract investment without subsidies.
4. Strengthening ESG Standards
Positioning environmental and social sustainability as the foundation of the national nickel industry.
China Still Dominates Price Formation
Meanwhile, Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies (CELIOS), highlights China’s dominance as Indonesia’s primary nickel buyer. A near-monopsony market structure leaves Indonesia with limited pricing power.
According to Bhima, Indonesia’s downstream policy has not been accompanied by the development of robust midstream and downstream industries. As a result, processed nickel products continue to flow to China due to weak domestic absorption.
State-Owned Enterprises as Global Counterweights
To break this dependency, Bhima urges state-owned enterprises (SOEs) to act as alternative buyers and industrial champions.
“Nickel can be absorbed by SOEs such as Krakatau Steel, Inalum, and PLN, particularly for the development of battery energy storage systems (BESS). This aligns with Indonesia’s broader energy transition agenda,” he said.
Indonesia’s Strategic Moment
With the world’s largest nickel reserves and a dominant position in global supply chains, Indonesia is structurally ready to control global nickel prices. The challenge lies not in resources, but in political resolve and strategic precision.
If this moment is missed, Indonesia risks remaining a low-value raw material supplier—rather than a price-setting power—in one of the most strategic commodities of the 21st century. (AT Network)
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