The Ministry of Energy and Mineral Resources (ESDM) plans to limit nickel production to maintain stable and high global prices. Director General of Minerals and Coal, Tri Winarno, emphasized the importance of production controls amid ongoing geopolitical tensions. Speaking at the Bisnis Indonesia Economic Outlook event in Jakarta on 10 December 2024, he stated, “We aim to optimize nickel products in the market to prevent oversupply, which will help raise prices.” Although no timeline was provided, Tri highlighted the need for Indonesia to strengthen its resilience during global challenges. Previously, the government reduced nickel ore supply to protect local miners from declining global prices. For example, French mining company Eramet SA, operating in North Maluku, received a 29% lower production quota in 2024. This policy prompted miners to prioritize high-grade ore for stainless steel production, impacting domestic smelters, which were forced to import expensive ore for electric vehicle battery production.
The oversupply of nickel derivative products, fueled by the rapid development of domestic smelters, has caused a drop in global prices. Entrepreneurs have urged the government to impose moratoriums on new smelter permits, particularly for RKEF (rotary kiln-electric furnace) technology projects. Despite discussions over the years, no concrete action has been taken, leading to an oversupply of second-class nickel products like ferronickel (FeNi), a raw material for stainless steel. According to Hendi Prio Santoso, CEO of MIND ID, the oversupply has rendered ferronickel prices uneconomical, barely covering production costs. Speaking at a parliamentary hearing on 4 December 2024, Hendi called for regulatory reforms to govern smelter development. “We hope for better governance and restrictions on smelter permits to avoid oversupply in the global market,” he concluded.
