Indonesia Introduces Regulatory Curtailment on Nickel Smelter Investments

New Licensing Restrictions Under PP 28/2025

The Indonesian government has officially implemented Government Regulation (PP) No 28/2025, introducing significant restrictions on new investments in the nickel smelter sector through the Industrial Business License (IUI) framework. This regulatory move specifically targets new nickel processing companies producing intermediate nickel products, regardless of whether they employ pyrometallurgical (RKEF technology) or hydrometallurgical (HPAL technology) methods.

Economic Rationale and Industry Impact

According to Bhima Yudhistira, Executive Director of CELIOS, this policy represents a necessary correction to the previously unchecked expansion of smelter capacity. The research institution argues that the rebound in nickel prices is not solely dependent on the quantity of processed nickel production. Therefore, the limitation on new smelter permits should be accompanied by regulatory firmness, policy consistency, and a clear decarbonization roadmap that prioritizes both environmental protection and the rights of local communities in mining areas.

Regulatory Scope and Implementation

The new regulation forms part of Indonesia's broader effort to manage its nickel industry more effectively. By controlling the proliferation of new smelters, the government aims to prevent market oversupply and maintain a more sustainable growth trajectory for the sector. The policy is expected to have significant implications for both existing and prospective investors in Indonesia's nickel processing industry.