Recently, the Indonesian Nickel Miners Association (Asosiasi Penambang Nikel Indonesia, APNI) stated in an interview that the Indonesian government plans to cut nickel ore mining quotas in 2026. According to the government's annual Work Plan and Budget (RKAB), the nickel ore mining quota target for 2026 is approximately 250 million metric tonnes, a reduction of about one-third compared to the 379 million tonnes in 2025.
This news has sparked market concerns over future nickel supply, leading to a subsequent rise in nickel prices. From December 19 to 26, SHFE nickel futures gained over Yuan 15,000/tonne, with the most-traded contract briefly breaking through the Yuan 130,000/tonne level to reach a high of Yuan 130,880/tonne, marking a new high since the first quarter of this year.
I. Introduction to APNI and RKAB
APNI, the Indonesian Nickel Miners Association (Asosiasi Penambang Nikel Indonesia), is an industry association representing the interests of Indonesia's nickel mining sector, with over 300 member companies. It engages with the government in communication and cooperation, participates in formulating industry policies and price indices, and promotes the development of downstream industries. The interviewee in the report was its current Secretary-General, Ms. Meidy Katrin Lengkey.
RKAB (Rencana Kerja dan Anggaran Biaya), directly translated as Work Plan and Budget, is the core management document for the mineral and coal mining sector in Indonesia. It is a mandatory annual document that all mining companies holding mining permits (such as IUP, IUPK, etc.) in Indonesia must prepare, submit, and obtain government approval for, detailing their work plans, including mining quotas.
As an industry representative body, although APNI is a non-governmental organization and its data does not constitute final government regulation, the authority of its information often makes it an effective precursor signal for policy. The reported 250-million-tonNE quota target in this context is likely derived from APNI's compilation of the declared intentions of its member companies, which cover almost all mining enterprises in Indonesia, lending it considerable credibility.
II. Estimation of Nickel Ore Consumption in Indonesia
According to Mysteel, Indonesia's full-year 2025 nickel pig iron (NPI) production is estimated at 1.8602 million tonnes in nickel content (December figure is an estimate, same below), nickel matte production at 333,200 tonnes, and MHP production at 470,700 tonnes (the portion locally converted to nickel sulfate or electro-deposited nickel is already included in the production of nickel intermediate product). Based on a pyrometallurgical process using nickel ore with 35% moisture content, a median recovery rate of 94%, and an average feed grade of 1.55%, and a hydrometallurgical process using ore with 40% moisture content, a median recovery rate of 92.5%, and an average feed grade of 1.2%, the calculated ore consumption is as follows: approximately 233 million wet metric tonnes (wmt) for the pyrometallurgical process and about 71 million wmt for the hydrometallurgical process, totaling 303 million wmt.
Similarly, based on Mysteel's projected production schedules for various nickel products in Indonesia for 2026, and considering possible changes in feed grades and recovery rates, the estimated nickel ore consumption for Indonesia in 2026 is approximately 327 million wmt. Therefore, the reported 250-million-tonen mining quota would result in a gap of about 77 million wmt compared to the projected consumption.
III. Measures
1. RKAB Amendment Applications
According to Ministerial Decree No. 17 issued by Indonesia's Ministry of Energy and Mineral Resources in October 2025, holders of IUP/IUPK permits may submit a request to amend their RKAB once per calendar year. This amendment request should be submitted after the permit holder files their periodic report for up to the second quarter, or at the latest by July 31 of that year.
Taking 2025 as an example, APNI initially disclosed that the approved RKAB volume for the year was 298 million tonnes. Through several rounds of supplementary approvals, this cumulative volume increased to approximately 379 million tonnes by year-end, representing an additional 81 million tonnes approved within the year. Therefore, the current 250-million-tonne target could first be interpreted as a strong initial signal from the government guiding supply expectations, yet its final implementation retains a degree of flexibility.
2. Imports from Neighboring Countries
In recent years, Indonesia has imported a large amount of nickel ore, with the Philippines being its main source. According to data from Statistics Indonesia (BPS), Indonesia imported 12.47 million wet metric tonnes (wmt) of nickel ore from January to October 2025, with full-year imports projected to exceed 15 million wmt. This figure compares to 10.47 million wmt in 2024 and a mere 374,000 wmt in 2023.
Driven by demand, imports in 2026 are expected to potentially climb to a range of 20-25 million wmt. While this volume is significant, even using the upper limit of 25 million tonnes (0.25 billion tonnes) for calculation, it plays a notable supplementary role but is insufficient to independently bridge the total gap of 77 million tonnes (0.77 billion tonnes). Its effect is more about alleviating marginal pressure.
3. Adjustment via Reserve Inventories
Plant reserve inventories serve as another crucial buffer. Under normal market conditions, smelters typically maintain nickel ore inventories equivalent to 1-2 months of production needs (approximately 8.3% to 16.6% of annual consumption) to smooth out procurement fluctuations. Based on Indonesia's 2025 nickel ore consumption of 303 million tonnes, total reserve inventories across all industrial parks in Indonesia are estimated to be around 25-50 million tonnes.
However, it is important to note that inventory levels are highly elastic and adjust flexibly based on supply expectations. For instance, during the first half of 2024 when delayed RKAB approvals raised supply concerns, raw material inventories at some plants were compressed to ultra-low levels of 1-2 weeks. Conversely, inventories are rebuilt when supply expectations ease. This means that in the initial stage of quota tightness, drawing down existing inventories can delay the actual onset of shortages, buying time for policy adjustments or finding alternative sources.
Looking forward, with an estimated total demand of 327 million tonnes, an initial quota of 250 million tonnes, and a maximum supplementary import volume from the Philippines of 25 million tonnes, the nickel ore gap in 2026 is expected to be around 52 million tonnes.
Written by Cora Ji, jiruyan@mysteel.com
