On March 4, Mysteel inquired with Meidy Katrin Lengkey, Secretary General of the Indonesian Nickel Miners Association (APNI), regarding widespread market concerns about Indonesia's nickel policies. Addressing a series of issues currently drawing significant market attention--including resource balance amidst the tightening of RKAB quotas, raw material security for new smelting projects, quota adjustments for specific mining areas, and reforms to the nickel ore pricing mechanism--Secretary General Meidy provided detailed clarifications and responses.
Key Points:
Indonesia has set its 2026 RKAB production quota target at approximately 260-270 million tonnes, aiming to compress the global nickel market surplus from a projected 261,000 tonnes down to 89,000 tonnes. This supply management measure directly supports nickel prices.
Indonesia has an RKAB revision mechanism in place, allowing companies to apply for additional quotas mid-year based on actual production performance. This implies that the initial quota tightening at the start of the year is not the final supply ceiling, and there is flexibility for dynamic adjustments in actual supply volumes.
Indonesia is promoting reforms to its nickel ore pricing formula, intending to incorporate the cobalt value contained in the ore into the pricing system. This move would directly raise the official benchmark prices for ore types like limonite, thereby increasing mining costs and raw material procurement costs for downstream smelters.
Detailed text:
Question 1
Indonesia's downstream policy has been very successful. But with RKAB quota tightening this year, how does the government balance between saving resources and ensuring enough ore for new smelters? Is there a risk some new smelters may face ore shortage?
Answer:
Indonesia is currently implementing a rebalancing strategy between resource conservation and the sustainability of downstream development.
If we look at the data from recent years, there has been a significant gap between approved RKAB quotas and actual production realization. For example, in 2025 the approved RKAB quota was around 379 million tons, while actual production was approximately 295 million tons.
This means the adjustment of RKAB quotas in 2026 is essentially closer to actual production levels, rather than a policy to shut down production.
However, localized or temporary ore shortages may still occur, especially for new smelters that:
- do not yet have their own mining operations,
- do not have long-term offtake agreements, or
- are not yet fully prepared in terms of logistics and ore blending.
Therefore, going forward the industry needs to move toward stronger mine–smelter integration to ensure a more stable supply chain.
Regarding the 2026 RKAB quota, it is correct that the government has set the national nickel production quota at around 250–260 million tons.
The Indonesian Nickel Miners Association (APNI) respects this decision, which falls under the authority of the Directorate General of Mineral and Coal of the Ministry of Energy and Mineral Resources, as part of several strategic objectives:
1. Safeguarding National Resource Resilience
As the world's largest supplier of nickel, Indonesia carries a strategic responsibility to manage its resources wisely. Production control is not intended to restrict growth, but to ensure that resource exploitation remains measured and sustainable for future generations while supporting long-term downstream development.
2. Managing Global Surplus Rationally
According to the International Nickel Study Group (INSG), the global nickel market in 2026 is projected to experience a surplus of around 261,000 tons. Even after Indonesia adjusted RKAB quotas to around 250 million tons, the market is still expected to show a surplus of about 89,000 tons.
This means the policy does not create scarcity, but rather helps correct market imbalances to maintain a healthier and more sustainable market.
3. Positive Impact on Price Stability
Since APNI first communicated the potential supply management policy in early December 2025, followed by an official statement from the Ministry of Energy and Mineral Resources later that month, nickel prices increased significantly from around USD 14,800 to USD 18,200 per ton.
This represents one of the most meaningful price movements in the past decade and reflects the market's response to credible and measured supply management.
4. Transformation from Quantity to Quality
Indonesia is shifting its focus from pure production volume to higher-quality industrial governance.
Implementation of ESG standards aligned with international frameworks, the Paris Agreement, the EU CBAM mechanism, and Battery Passport requirements are becoming key priorities.
Through this approach, Indonesia aims to be not only the largest producer, but also the most responsible and competitive supplier within the global battery and energy transition supply chain.
5. Optimizing State Revenue through Pricing Reform
Production control does not necessarily reduce state revenue. In parallel, APNI is advocating for improvements to the Mineral Reference Price (HMA/HPM) formula, so that it better reflects the true economic value of nickel resources.
With improved pricing mechanisms, state revenues from royalties, PNBP, and taxes can remain optimal, even under a more controlled production framework.
This approach ensures that:
- the state captures maximum value from every ton of nickel,
- the industry continues to operate sustainably, and
- downstream investment remains attractive.
APNI believes that data-driven and sustainable production management is the key foundation for Indonesia to become a globally competitive and sustainable nickel industry hub.
This strategy is not about limiting growth, but about managing Indonesia's leadership in the global nickel market in a smarter, more responsible, and higher value-added way.
Question 2
There is news today that APNI mentioned RKAB revision in July, with possible increase of 25–30%. When can companies start to apply? How long does approval take?
Answer:
In practice, RKAB revisions are a mechanism that is available every year for mining companies when production adjustments are needed.
Companies can usually submit revision proposals around the middle of the year, after the government evaluates several factors such as:
- production realization,
- supporting documentation including exploration and reserve data,
- updated mining feasibility studies, and
- compliance with financial obligations to the state.
If the revision is approved, additional quota adjustments may be granted, but the final decision fully rests with the government.
The approval timeline depends on the completeness of company documentation and the technical evaluation process, and in some cases the revision request may also not be approved.
Question 3
In February, WBN got 12 million tons initial quota. This number surprised many people. Why did WBN receive such a low quota compared to last year?
Answer:
The determination of RKAB quotas for each company is based on a technical evaluation by the government, which considers several aspects such as:
- mining production plans,
- smelter demand and integration,
- operational capacity, and
- regulatory compliance.
Therefore, the initial RKAB allocation at the beginning of the year is often relatively conservative, and there is still the possibility for adjustments through RKAB revisions, provided that supporting documentation, reserve data, production readiness, and industry demand justify the increase.
Question 4
Indonesia imported about 15 million tons from the Philippines in 2025. Last month APNI signed the "IndoPhil Nickel Corridor" with PNIA. How much Philippine ore can Indonesia import in 2026? 25 million? 30 million?
Answer:
The IndoPhil Nickel Corridor cooperation between APNI and the Philippine Nickel Industry Association (PNIA) aims to strengthen regional supply stability, particularly for Indonesian smelters that require additional ore supply.
In 2025, Indonesia imported approximately 15.3 million tons of nickel ore from the Philippines.
For 2026, imports may increase depending on:
- domestic smelter demand,
- Indonesia's mining production levels, and
- global market conditions.
Industry discussions often mention 20–30 million tons as a potential range, but the actual realization will largely depend on Philippine production capacity.
Based on discussions during APNI's visit to the Philippines, the country's maximum production capacity is estimated at around 50–60 million tons annually, coming from approximately 37 nickel mines.
Question 5
There has been talk that Indonesia may change nickel ore pricing to include cobalt value. Is this policy being studied? When might it be announced?
Answer:
APNI has indeed been providing input to the government regarding the reformulation of the nickel ore pricing formula, in order to better reflect the value of other minerals contained within the ore.
Currently, the pricing formula is mainly based on nickel content, while certain ore types -- particularly limonite used for HPAL processing -- also contain cobalt, which has significant economic value.
Therefore, there are ongoing discussions on whether cobalt value could be incorporated into the pricing formula, so that it more fairly reflects the real economic value of the resource and potentially increases state revenues from royalties, PNBP, and taxes.
Question 6
This year Indonesia has many new HPAL projects starting. They need limonite ore. How does the government coordinate saprolite and limonite quota allocation? Will HPAL projects get special consideration?
Answer:
The growth of HPAL projects has significantly increased demand for limonite ore, which differs from RKEF smelters that typically use saprolite ore.
The government seeks to balance this allocation by considering:
- the needs of each type of smelter,
- the characteristics of ore reserves in each mining region, and
- the optimal utilization of national mineral resources.
The key objective is to ensure that both saprolite and limonite ores are utilized efficiently across the downstream value chain, preventing imbalances in resource use.
As more HPAL projects come online, strong coordination between mines, smelters, and the government becomes increasingly important to maintain stable limonite supply.
......
Indonesia has evolved from being simply a nickel ore producer into a global downstream processing hub, covering the full value chain from stainless steel to electric vehicle batteries.
The key challenge moving forward is to ensure:
1. long-term resource sustainability,
2. stable raw material supply,
3. industrial competitiveness, and
4. the transition toward green nickel through ESG implementation.
With this approach, Indonesia will continue to play a key role in the global critical minerals supply chain and the global energy transition.
Written by Cora Ji, jiruyan@mysteel.com
