Indonesia is considering a moratorium on new nickel smelters producing semi-finished products as global supply outpaces demand by 2.5 million tonnes, pushing prices to a year-to-date low of $15,510 a tonne. Minister Bahlil Lahadalia emphasized shifting toward higher-value downstream processing. Simultaneously, President Prabowo Subianto launched $10.2 billion in Weda Bay projects, reaffirming Indonesia's commitment to safeguard foreign investments amid rising cost concerns from Chinese firms.
Proposed nickel smelter moratorium
- ▪Indonesia plans to review its nickel strategy by limiting new semi-processed smelter capacity to curb global overproduction, protect local industries, and prioritize direct higher-value downstream facilities.
- ▪Coordinating Downstream and Energy Transition Minister Bahlil Lahadalia stated on October 7, 2026, that Indonesia seeks to select which nickel industries should continue and which require a moratorium to avoid reckless exploitation of natural resources.
- ▪Coordinating Minister Bahlil Lahadalia stated that promoting direct downstream manufacturing aims to achieve a genuine shift in Indonesia's economic structure.
Chinese investor concerns
- ▪Chinese companies operating in Indonesia sent a letter urging the government to implement more business-friendly policies to safeguard foreign investment.
- ▪Chinese investors face potential disruption from Indonesia's proposed nickel smelter moratorium, following prior warnings that tighter mining quotas, higher taxes, and a new pricing formula were driving up costs.
Global nickel oversupply and prices
- ▪Global nickel supply has outpaced demand by approximately 2.5 million tonnes, putting downward pressure on commodity prices.
- ▪Global nickel prices dropped to a year-to-date low of $15,510 a tonne on October 2, 2026, according to Fitch's BMI Research.
- ▪Fitch's BMI Research reported that further downside risks to global nickel prices will hinge on Indonesia's nickel supply policy.
Weda Bay nickel project launches
- ▪President Prabowo Subianto announced the investment safeguards during a launch ceremony at Weda Bay for commercial operations of four nickel facilities and construction of six new projects.
- ▪Indonesian President Prabowo Subianto launched the country's first exports of electric vehicle batteries during a ceremony at Weda Bay on October 8, 2026.
- ▪Investment Minister Rosan Roeslani stated that the four operational projects at Weda Bay represent $3.4 billion in investment, while the six upcoming projects are expected to reach $6.8 billion.
- ▪Indonesian President Prabowo Subianto stated on October 8, 2026, that his government is committed to respecting and safeguarding all investments in the country.
Indonesia's nickel export market
- ▪Indonesia banned raw nickel exports in 2020 to promote domestic processing industries, growing its export value from $3.3 billion in 2017 to over $33 billion by 2024.
- ▪Indonesia holds the world's largest nickel ore reserves and is the top exporter of nickel products, accounting for about 60 percent of global supply.
Debatable claims
- ▪Indonesia's rapid nickel expansion is the primary driver of global supply gluts
- ▪Indonesia should halt new smelters producing semi-processed nickel products
- ▪Frequent regulatory shifts in Indonesia's nickel sector undermine foreign investment stability
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