- Curbs could affect new investments by Chinese companies
- NPI and ferro nickel supply growth could face constraints
Indonesia is considering restricting the construction and expansion of new smelters producing nickel semi-finished products to address oversupply and falling prices while encouraging investment in higher-value downstream manufacturing. The proposal could affect new investments by Chinese companies, which have played a significant role in developing Indonesia’s nickel processing industry.
Indonesia’s state-run news agency ANTARA, Energy and Mineral Resources Minister Bahlil Lahadalia raised the possibility of a temporary moratorium on new nickel semi-finished product facilities at the Investor Daily Summit 2026 in Jakarta on 7 October. He said oversupply in semi-finished nickel products had contributed to declining prices, prompting the government to reconsider its investment policies. Indonesia also plans to maintain control over mining production quotas to support nickel prices.
Focus shifts towards higher-value manufacturing
The Indonesian government aims to selectively promote industries rather than expand processing capacity across all segments. Major nickel semi-finished products include ferro nickel, nickel pig iron (NPI), nickel matte and mixed hydroxide precipitate (MHP). However, the government has not confirmed which products would be covered by the proposed restrictions.
The policy discussion also reflects Indonesia’s aim to retain more value from its domestic nickel resources. The Ministry of Energy and Mineral Resources highlighted that semi-finished products manufactured by local smelters are often exported for further processing and subsequently re-imported as finished products. The government intends to coordinate with the ministries responsible for investment and industry to encourage more final-stage manufacturing within the country.
The government’s remarks as a possible tightening of restrictions on new nickel smelters. Existing provisions under Indonesia’s risk-based business licensing regulation, PP 28/2025, already include restrictions relating to new smelters. However, the legal form of any additional measures and their application to existing permits or projects under construction remain unclear.
Chinese investment faces policy uncertainty
Potential restrictions could affect Chinese investors and foreign capital-backed supply chains serving stainless steel and electric vehicle battery industries. The proposed measures may influence future investment in nickel processing, although the government has not announced a confirmed implementation date or detailed regulatory scope.
At the same time, Indonesia continues to welcome investment in higher-value industrial projects. President Prabowo Subianto attended an event on 8 October marking the start of commercial operations and construction for nickel, aluminium and clean energy facilities at the Weda Bay Industrial Park, involving China’s Qingshan Group. The four announced projects represent investments of $3.4 billion, with six additional projects expected to attract a further $6.8 billion. The president reiterated his commitment to respecting and protecting foreign investment.
Implications for stainless steel raw materials
For the stainless steel industry, any restrictions on new NPI and ferronickel projects could influence the pace of nickel raw material supply growth over the medium to long term. However, the impact will depend on the final scope of the policy, the products covered and its treatment of existing projects.
Overall, Indonesia appears to be considering a shift away from unrestricted expansion of semi-finished nickel capacity towards higher-value domestic manufacturing. The timing and implementation of the proposed measures remain uncertain, making future regulatory announcements important for nickel producers, stainless steel manufacturers and investors.
Note: This article is published as part of a content exchange agreement between SteelDaily and BigMint.
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