Nickel smelter industry urges delay to HPM hike, export duty plan

Indonesia’s nickel smelter industry has called on the government to delay and reassess plans to increase the mineral benchmark price (HPM) and impose export duties on downstream products, warning that the measures could further strain an already pressured sector.

The Indonesia Nickel Industry Forum (FINI) said the proposed policies would add pressure on the nickel processing and refining industry, which is currently in a critical phase amid the impact of geopolitical tensions in the Middle East.

Rising global energy prices have significantly increased operational costs. At the same time, Indonesian nickel smelters are facing tightening supply and sharp, uncontrolled increases in sulfur prices.

Sulfur is a key raw material for high pressure acid leaching (HPAL) smelters, a technology widely used to produce battery-grade materials for electric vehicles. Around 75%–80% of Indonesia’s sulfur supply is sourced from the Middle East.

Currently, sulfur accounts for about 30%–35% of operating costs at HPAL facilities, up from around 25% previously.

On the supply side, smelters are also facing shortages of nickel ore due to domestic production quota restrictions, which have driven up ore prices.

“The proposed adjustment to the HPM, at a time when the industry is already under pressure, risks further increasing overall cost burdens,” FINI chairman Arif Perdanakusuma said on Friday, as quoted by Bisnis.com.

Businesses believe the policy should be reviewed carefully to avoid adding pressure to an industry currently in a critical phase, he added.

FINI also expressed serious concern over the planned export duties on downstream products. Arif said export duties should, in principle, be applied to ensure domestic supply of raw commodities, rather than to processed products that form the backbone of Indonesia’s downstreaming policy.

Read also: HPAL smelters seen holding adequate sulphur stocks despite Hormuz risks

The association warned that the policy could contradict the goal of increasing domestic value addition.

“If nickel ore prices are raised through the HPM while downstream products are subject to export duties, the industry will be burdened from both ends, potentially hampering and slowing Indonesia’s nickel downstreaming efforts,” Arif said.

FINI urged the government to adopt more adaptive and responsive policies in light of global developments, particularly in energy and supply chains.

It also called for a review of raw material quota policies to better align with industry needs, maintain production utilization rates, and ensure the availability of key inputs, including fuel, coal and sulfur, as part of maintaining national supply chain stability.

“The business community fully supports the national downstreaming and industrialization agenda. However, stronger policy synergy is needed to ensure the industry not only survives but remains competitive amid increasingly complex global pressures,” Arif said.

He added that downstreaming cannot succeed simply by building smelters. It requires consistent policies, adequate raw material supply, competitive costs, and supportive fiscal measures.

“Without swift and measured steps, these pressures risk weakening industry performance, reducing employment, undermining Indonesia’s position in the global supply chain, and potentially causing projects to stall,” he said.

Editing by Reiner Simanjuntak