NICKEL: Indonesia’s pivot from disruptor to price guardian
For nickel investors, Indonesia’s policy pivot marks a new era. The world’s top nickel producer is no longer acting as a growth-at-all-costs disruptor, but instead more like an OPEC for nickel “ONEC”, ready to adjust the taps to defend a price level.
The incentives are aligned: for example, in April 2025 Indonesia updated its royalty regime to an ad-valorem system that increases taxes on nickel sales when prices rise, up to 19% at higher price tiers. Under this scheme, every $1,000/ton increase in nickel price boosts Indonesia’s tax revenue by roughly $250/ton, nearly double the sensitivity under the old flat tax .
This gives Jakarta a direct fiscal motive to keep nickel prices higher.
Where’s the nickel surplus
Key to Indonesia policy shift is the mining quota system, known as the RKAB (annual work plan and budget). All miners must submit an RKAB production plan each year for government approval, which sets an output quota.
In 2023, Indonesia relaxed the RKAB system to issue three-year quotas in one go, but this backfired as companies secured excessive allocations far above their near-term capacity to use the extra quotas if prices increased.
For example, Indonesia’s Ministry of Energy and Mineral Resources approved production quotas (RKAB) totalling 364 million tons for 2025. However, according to the Secretary General of the Indonesian Nickel Miners Association, actual production through September 2025 reached only approximately 200 million tons — a utilization rate of only 55%, according to a recent ICBC report.
The nickel market is repricing not just supply cuts, but the realization that much of the surplus never existed. That adjustment could prove uneven through 2026, with the risk of overshoot as “paper” capacity is re-adjusted and physical balances tighten.
In the long-term, Indonesia has consolidated control of nickel supply supply during the 2024 trade war, and is now using that leverage to defend value. The shift is deliberate: from volume maximization to price discipline.
Despite the risks, Indonesia is working to put a floor under nickel prices, which means the only direction of travel for prices is up.
