Govt urged to prioritize mining quotas for smelter-affiliated mines

Several Indonesian nickel smelters may halt operations if nickel ore supply remains tight, Arif Perdanakusumah, chairman of Forum Industri Nikel Indonesia, an industry group also known as FINI, said in a Nov. 22 statement.

While Indonesia owns about 45% of the world's total nickel reserves, Arif said nickel processors have ramped up nickel ore purchases from the Philippines, as domestic nickel ore supply has failed to keep up with the rapid expansion of smelters. Indonesia imported over 10.4 million metric tons of nickel ore from the Philippines in 2024, and the volume is estimated to rise to about 15 million mt in 2025, according to FINI data.

If nickel ore supply tightness continues, nickel ore prices may skyrocket, and smelters face the risk of closure due to high production costs, Arif said. Other investments in Indonesia's battery and electric vehicle industries may also be disrupted, Arif added.

"Indonesia's golden moment could slip away if this supply crisis is not addressed seriously," Arif said.

A 2020 nickel ore export ban helped Indonesia attract investments in its nickel downstream industry. Indonesian smelter capacity reached an estimated 1.8 million mt of class 2 nickel and about 395,000 mt of class 1 nickel in 2024, jumping from just 250,000 mt of class 2 nickel smelter production in 2017, based on FINI data.

Indonesia's global nickel market share currently stands at over 60%, making it a major player in the stainless steel and battery material industries, Arif said. However, as smelters demand more nickel ore, the government shortened the validity of mining production quotas, known as RKAB, to one year from three years, further tightening domestic supply, Arif added.

"With hundreds of smelters continually increasing, the demand for mining quotas has surged, while the planning period for mining operations has shortened," Arif said. "As a result, the imbalance between mining production and industrial needs is becoming more pronounced."

To ease nickel ore supply tightness, Arif urged the Indonesian government to prioritize the approval of RKAB for mines affiliated with smelters. The state must also strengthen exploration efforts and improve mining technical capacity and compliance, Arif said.

"Without solid upstream planning, the irony of nickel ore imports will continue to haunt Indonesia's grand ambitions," Arif said. "Downstream processing is a historic opportunity, but it can only be seized if Indonesia ensures one thing: raw materials for its own industries must never be scarce in a country rich in nickel."

Platts, part of S&P Global Energy, assessed 10% Ni content Indonesian nickel pig iron at $108.50 per metric ton unit on Nov. 21, dropping 50 cents/mtu day over day and down $5.6/mtu from Nov. 3.