Indonesia remains committed to controlling nickel exports as well as increasing downstream value, the country's environment minister told delegates at the first Argus Nickel Indonesia conference today.
Cecep Mochammad Yasin, director of mineral business development at the energy and mineral resources ministry, said the rapid growth of Indonesian nickel output made it necessary to adjust royalty rates and maintain output controls to preserve "invaluable nickel reserves" and stabilise prices on the international market.
The Indonesian government in March adopted Regulation 19 of 2025, increasing royalty rates for nickel ore to 14-19pc, up from a previous flat rate of 10pc, while Ferronickel and NPI royalty rates were introduced at 5-7pc and nickel matte at 3.5-5.5pc. The new rates will take effect from the end of April.
"This is a critical step towards ensuring that our natural resources give optimum benefits to all Indonesians by gradually increasing royalty rates," Cecep said.
Preserving Indonesia's mineral wealth
Cecep emphasised his country's commitment to preserving nickel reserves, saying Indonesia needed to maintain production controls to increase the longevity of critical minerals.
"We have a responsibility to manage this resource to ensure availability for future generations," he said. "Massive exploitation of natural resources without regard for conservation will result in resource depletion. We must learn from other countries' experiences to make sure our nickel reserves are not depleted too quickly."
Indonesia earlier this year set a production quota for nickel ore in 2025 at around 200mn t, a reduction from 2024's estimated production of 215mn t. The government had previously approved 240mn t of production out to 2026, but a reduction was made in January owing to a nickel supply glut in the international market.
Since then, nickel prices have continued to fall, reaching their lowest since early 2020 at $14,000-14,030/t on the London Metal Exchange (LME) on 9 April after US tariffs were announced. Prices have since bounced back to about $15,000/t on continued trade negotiations between the US and other economic partners.
The minister also hinted at working with other nickel producing countries "to create a shared understanding of global production management", which he said would be a "key step" towards international price stability.
Government officials warned delegates that over the coming years, the quality of nickel grades will decline, as some of the low-hanging fruit has already been picked.
"Resource quality will gradually decline," Indonesia's National Economic Council executive director Tubugas Nugraha said. "Over the next 2-3 years this trend will be balanced by increased production, but in the longer term the nickel content, especially in our NPI products will face structural challenges."
Increasing downstream ambitions
Indonesia has ambitions to add further value downstream in the supply chain, including in stainless steel and battery production, delegates heard.
"By promoting the growth of domestic nickel processing and refining industries, we can increase added value and reduce reliance on exports," Tabagus told delegates. "Downstreaming can also absorb part of the supply and produce consistent demand."
Tubagus added that downstreaming is part of Indonesia's 2045 plan for economic development, moving from extracting raw ore to producing value-added materials.
He added that the country's ambition was to become a "global hub" for stainless steel, battery raw materials and electric vehicle (EV) components.
Under the Indonesia Emas 2045 plan, the country plans to invest over $600bn into commodity linked industries in the coming decades, in order to escape what Indonesian national development planning ministry energy resources director Nizhar Marizi called its own "middle-income trap".
Tax revenues will be key to this plan, as a report by the World Bank in December 2024 highlighted, saying Indonesia would need "structural reforms" to increase tax receipts and fund its ambitions.
