Indonesia's energy minister, Bahlil Lahadalia, has ordered a study on whether to stop issuing permits for smelters that make only semi-finished products. He blamed falling nickel prices on oversupply, saying Indonesian production is out of control.
At a glance
- Bahlil put global nickel demand at 3.5 million tonnes a year and the surplus at nearly 800,000 tonnes.
- Nickel production has reached 113% of this year's target, while ferronickel processing has reached only 66%, government data show.
- Bahlil said Indonesia would keep tight control over mining quotas to avoid overproduction.
Background
Indonesia banned nickel ore exports in 2020 to push investment into domestic smelting. Many of its plants make intermediate, semi-finished products that are processed further abroad. Miners need an approved work plan and budget, known as an RKAB, which sets how much they can produce. Ferronickel is a nickel-iron alloy used to make stainless steel.
What happened
Bahlil Lahadalia, Indonesia's energy and mineral resources minister, said on Monday he had told the ministry's minerals and coal directorate to study a moratorium on new smelters that make only semi-finished products. He spoke at the Minerba Convex mining conference in Jakarta, the Jakarta Globe reported.
He estimated that 50% to 60% of Indonesia's downstream output is still at the semi-finished stage. The aim is to steer investment toward plants that make finished goods, rather than exporting semi-finished material for processing overseas.
Why nickel prices are falling
Bahlil blamed oversupply for the fall in nickel prices. He put global demand at 3.5 million tonnes a year and said the market has a surplus of nearly 800,000 tonnes.
Government data cited by Argus show nickel production at 113% of this year's target, while ferronickel processing has reached only 66%. Bahlil said producers should not "go all out" when prices are weak, adding that this is what is happening with nickel.
What it means
A moratorium would apply to new smelter permits, so it would not cut current output. Tighter mining quotas would act on supply faster, and Argus reported that Indonesia is expected to keep that approach for coal and nickel.
Bahlil said the downstream policy lifted the value of Indonesia's nickel exports from about $3.3 billion in 2017-2019 to $33.9 billion in 2024, according to ministry data.
Our read
Outlook: bullish. Talk of tighter quotas and fewer new smelters points to slower supply growth, but no decision has been made.
What to watch
- The ministry's study and any decision on new smelter permits.
- Indonesia's 2027 mining quota approvals; coal producers expect results as early as December.
- Whether Indonesian producers cut output in response to the minister's comments.
For information only, not investment advice.
Nickel price in India
metalscost.com India reference price as of 2026-11-05.
Detailed analysis
Timeline
- 2026-11-02: Bahlil Lahadalia orders a study of a smelter moratorium at the Minerba Convex conference.
Supply Drivers
Nickel production has reached 113% of this year's target, adding to a surplus the minister puts at nearly 800,000 tonnes.
Government Policies
Indonesia is studying a moratorium on new semi-finished smelters and plans to keep tight control of mining quotas.
Refinery Output
Ferronickel processing has reached only 66% of its target so far this year.
What could lift prices
- Indonesia may stop approving new smelters that make only semi-finished products.
- The government plans to keep tight control over mining quotas.
What could weigh on prices
- The market has a surplus of nearly 800,000 tonnes, Bahlil said.
- Indonesian nickel production is already at 113% of this year's target.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Indonesia | High | Indonesia is weighing limits on new smelters and tight mining quotas to address the nickel surplus. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Smelting | Negative | New smelters making only semi-finished products may not get permits. |
| Mining | Neutral | Miners face continued tight control over production quotas. |
Who gains, who loses
- Makers of finished nickel products in Indonesia: The policy aims to steer investment toward finished goods.
- Investors planning semi-finished smelters: They may not get permits if a moratorium is imposed.
Other ways this could play out
- If Indonesia imposes the moratorium and tightens quotas, supply growth could slow and support prices.
- If the study ends without action, the surplus could keep pressure on nickel prices.
Price risks
- A surplus of nearly 800,000 tonnes keeps pressure on prices.
- Policy uncertainty could delay smelter investment decisions.
Technical view
Price is mixed relative to its 20-period and 50-period moving averages, showing no clear trend alignment.
Computed from metalscost.com's own stored price history.
