Nickel ore cap risks 30% drop in smelter utilization: FINI
Monday, March 2 2026 - 09:09 AM WIB
By Adianto P. Simamora
Indonesian government’s plan to cut approved nickel ore output under the 2026 Work Plan and Budget (RKAB) could reduce domestic smelter utilization by up to 30% this year, the Indonesia Nickel Smelter Forum (FINI) said.
“We predict utilization could fall by around 25–30%,” FINI chairman Arif Perdana Kusuma said in a televised interview on Feb. 27. “Because the decline in utilization will be very significant, production will also drop significantly. That is what all parties must understand.”
The Ministry of Energy and Mineral Resources recently announced plans to set the 2026 nickel ore production quota at 260–270 million tonnes, down from 379 million tonnes previously targeted for 2025.
Read also: FINI warns ore shortage threatens Indonesia’s nickel smelters
FINI estimates domestic smelters will require between 340 million and 350 million tonnes of ore in 2026 to support higher refined output, compared with around 300 million tonnes consumed in 2025. Arif said the potential supply gap of up to 100 million tonnes could constrain production.
Indonesia’s nickel processing capacity has expanded rapidly since the 2020 ban on raw ore exports, with about 1.5 million tonnes of additional capacity added, he said. Refined nickel output reached around 2.5 million tonnes in 2025 and is projected to rise to 2.7 million tonnes in 2026.
At current levels, Indonesia accounts for roughly 70% of global nickel supply, according to FINI.
Arif added that tighter ore availability would likely push up production costs.
“From the cost side, our production costs will certainly increase because nickel ore will become scarce and prices will rise significantly, while the selling price will not increase proportionally,” he said.
Editing by Reiner Simanjuntak