RI’s nickel reset: From quota shock to selective growth

By Adianto P. Simamora

Key takeaways:

• The 2026 nickel ore quota is set at 260–270 million tonnes, compared with smelter demand estimates of 340–350 million tonnes.

• Nickel miners submitted 2026 RKAB plans of around 460–470 million tonnes, but the ministry is holding approvals to roughly half that level to protect reserves.

• RKEF smelters are being pushed toward lower-grade ore, while HPAL plants are more exposed to operational shutdowns under the tighter framework.

The Ministry of Energy and Mineral Resources (MEMR) has repeatedly declared that the 2026 Work Plan and Budget (RKAB) for nickel production would be in the range of 260–270 million tonnes, down from a previously targeted 379 million tonnes for 2025.

At the same time, MEMR data cited by Director General of Minerals and Coal Tri Winarno show that nickel mining companies submitted 2026 production plans reaching around 460–470 million tonnes, meaning only a little over half of requested volumes is likely to be approved.

Tri has framed this as a reserves and sustainability decision: Indonesia’s nickel reserves are estimated at about 5 billion tonnes, and at extraction rates of 300–350 million tonnes per year those reserves could be depleted in under 20 years.

On the demand side, processing capacity and ore requirements continue to grow, with the Indonesia Nickel Smelter Forum (FINI) estimating that domestic smelters would require 340–350 million tonnes of ore in 2026, up from roughly 300 million tonnes last year. APNI places potential smelter demand even higher, at around 400 million tonnes, once planned projects and higher utilization are taken into account.

Even taking FINI’s more conservative figure, the difference between the 260–270 million tonne quota and 340–350 million tonnes of demand implies a potential gap of up to 100 million tonnes. FINI warns this could reduce average utilization across processing plants from around 88–90 percent in 2025 to the 70–75 percent range in 2026.

This squeeze comes as installed nickel processing capacity is still expanding. FINI data show that Indonesia’s installed processing and refining capacity increased from about 2.56 million tonnes of nickel in 2024 to 2.78 million tonnes in 2025 and is expected to reach roughly 3.07 million tonnes in 2026, driven mainly by new HPAL projects. In other words, more furnaces and HPAL lines are competing for fewer approved tonnes of ore, with imports from the Philippines — projected to rise from 15.33 million tonnes in 2025 to around 23 million tonnes in 2026 — only partially offsetting domestic constraints.

With that macro gap in mind, the 2026 decisions at project level show how the cap plays out on the ground. At PT Weda Bay Nickel (WBN), the ministry has set an initial 2026 RKAB allowance of 12 million wet metric tonnes, down from 42 million tonnes approved for 2025. Eramet, which owns WBN alongside Tsingshan and PT Aneka Tambang Tbk, says the joint venture will seek a higher quota in the mid-year revision window, citing ore needs from smelter and HPAL facilities at Indonesia Weda Bay Industrial Park (IWIP), where demand is estimated at more than 100 million tonnes per year.

Read also : Ministry approves partial 2026 coal, nickel RKAB quotas

The national cap also appears in the way MEMR now manages permits and approvals. The shift back to annual RKAB, combined with mandatory digital submission through MinerbaOne, has turned administrative completeness into a central filter for quota allocation.

Under this system, incomplete documentation — ranging from missing audited financial statements to absent reclamation guarantees or unresolved royalty payments — can directly lead to RKAB rejection or delayed approval.

The 2025 mass suspension of 190 mining companies over reclamation guarantee failures, which included several dozen nickel operators, and the subsequent freezing of environmental permits for 80 coal and nickel business units underscore how compliance is now embedded in production planning.

The impact of this tighter quota and compliance regime is already visible in Indonesia’s major nickel industrial parks. In Morowali, where the Indonesia Morowali Industrial Park (IMIP) hosts more than 40 smelter tenants, the national squeeze coincides with a safety-driven operational halt.

On 19 March, the government suspended operations at an HPAL project in the Indonesia Morowali Industrial Park (IMIP) after a landslide at a waste disposal area killed a contractor. Environment Minister Hanif Faisol Nurofiq said all activities at the facility had been halted and that the ministry had moved to revoke its permits, transferring waste management responsibility at the site to estate operator PT IMIP. IMIP later clarified that, among four HPAL projects cited in earlier reports, only one plant was operational at the time, while the other three remain under construction. For 2026, this means a portion of HPAL capacity is offline while additional lines are not yet producing, adding a plant-availability constraint on top of the volume cap.

In Southeast Sulawesi and the Konawe cluster, the pressure arises more from permit density and uneven operational performance. The province holds the highest number of nickel IUPs in the country, and data cited by APNI and MEMR point to permits that have RKAB approvals but little or no production in recent periods. These cases sit alongside the broader tightening of RKAB approvals and environmental reviews, which together are reducing room for inactive or non-compliant operators in the quota system.

Technical factors also shape how the 2026 squeeze is felt across different technologies. With total ore volumes capped, RKEF smelters that were largely designed and financed around higher‑grade saprolite — commonly in the range of 1.7–1.8 percent nickel or higher — are more likely to face lower‑grade feed, and industry literature shows that using transitional ores around 1.4–1.5 percent nickel typically results in higher slag volumes, increased energy consumption and faster wear on MgO‑based refractory bricks, pushing up operating risk and costs.

For non‑integrated RKEF operators that do not control their own ore supply, lower grades under a capped quota regime can narrow the cost advantages that supported Indonesia’s earlier nickel expansion.

HPAL projects face a different set of constraints. Unlike RKEF smelters, they are designed for lower‑grade limonite, so they are less sensitive to feed grade but far more dependent on stable, continuous operations.

The recent suspension of an HPAL project at IMIP after a fatal landslide shows how an environmental or safety incident can temporarily remove a significant block of HPAL capacity from the system at once

In 2026, this comes at a time when most new HPAL plants are still in the construction or ramp-up phase, so part of the additional capacity is not yet fully available while another part is offline, widening the gap between installed nameplate capacity and what can realistically operate under tighter ore volumes and closer regulatory oversight.

Taken together, these developments show that Indonesia’s nickel reset is not simply about cutting volumes. It is about forcing the industry through a narrower gate: one defined by a 260–270 million tonne ceiling, stricter RKAB and environmental screening, and technology-specific pressures on both RKEF and HPAL plants.

For miners and smelter operators, the consequence is no longer just tighter supply. It is a new operating reality in which quota access, ore quality and plant continuity now sit on the same risk line.

How the sector navigates that reality in 2026 — especially through the mid-year RKAB revision window — will determine whether this reset becomes a managed correction or the starting point of a deeper structural shake-out.

Editing by Reiner Simanjuntak