Bahlil Lahadalia, Indonesia’s energy and mineral resources minister, has cited plans for a moratorium on construction of new smelters producing semi-finished nickel products. The proposal comes as a global supply glut weighs on the market.
The move would mark a turn for an industry Indonesia spent years building. A six-year-old ban on raw nickel ore exports spurred domestic mining and production, according to a study by Rafi Adis Subarna of Jakarta-based political risk consultancy KRA Group. Chinese investment supported the growth of the country’s nickel-processing capacity, Goldman Sachs said in a February commentary.
That expansion has given Indonesia a central place in the trade. The country held more than half the global nickel market in 2023, according to a study by Rafi Adis Subarna of Jakarta-based political risk consultancy KRA Group.
Chinese investment now accounts for about 75 per cent of Indonesia’s nickel refining industry, according to an estimate by the US-based Centre for Advanced Defense Studies.
Semi-finished products account for about 50 to 60 per cent of Indonesia’s total output. They include nickel pig iron, which is primarily used in stainless steel, and nickel matte, which is used in electric vehicle batteries.
Goldman Sachs said growth in Chinese investment had contributed to oversupply, which has weighed on nickel prices since 2023.
The question now is where Indonesia draws the line. Lahadalia’s team is preparing a recommendation for President Prabowo Subianto, who will decide which parts of the semi-finished nickel smelting sector face restrictions.
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