Indonesia: Nickel production curbs may ease as govt weighs high prices; export tax plans advance

• Indonesia considers lifting output to maximise revenue
• Nickel export tax to add new cost variable from Apr’26

SteelDaily: Indonesia is signalling potential flexibility in its nickel production policy, with authorities indicating a possible easing of output restrictions if raw material prices remain elevated amid ongoing geopolitical tensions.

Quota easing under consideration

Indonesia had earlier planned to curb nickel output through lower RKAB (Work Plan and Budget) approvals of around 260-270 million tonnes (mnt) for 2026, significantly below the estimated demand of 340-350 mnt. This raised concerns over raw material shortages, with smelter utilisation rates projected to fall to 70-75%, compared with around 90% last year.

However, the government has now indicated that production plans could be revised upward if strong price conditions persist. Since RKAB approvals are adjustable through the year, any relaxation could increase ore availability in the second half.

Policy shifts linked to market conditions

The move reflects a shift toward dynamic supply management, where production decisions are aligned with global price trends and domestic industry requirements. Higher commodity prices, driven by Middle East tensions, are prompting Indonesia to consider increasing output to maximise revenue.

Market participants view this as a signal that Indonesia’s strict supply control stance may soften in the near term, depending on price sustainability and smelter demand.

Export tax to reshape cost structure

Alongside quota adjustments, Indonesia is advancing plans to introduce export taxes on nickel, likely from April. While exact rates are yet to be finalised, the move is expected to add another layer of cost pressure across the nickel value chain.

The combination of flexible quotas and export levies could increase price volatility, directly impacting nickel pig iron and stainless steel production costs.

Outlook

Indonesia’s policy direction remains fluid, with supply likely to be closely calibrated to price movements. Any easing in quotas could cap price gains, while export taxes may offset this by raising overall costs.

Note: This article has been written in accordance with a content exchange agreement between SteelDaily and BigMint.