Indonesia Implements Temporary Halt on New Nickel Smelter Construction

Regulatory Framework and Industry Impact

The Indonesian government has introduced a temporary halt on new nickel smelter construction through Government Regulation No. 28/2025, focusing on risk-based business licensing. This regulation specifically targets smelters producing intermediate nickel products, including nickel matte, nickel pig iron (NPI), feronickel (FeNi), and mixed hydroxide precipitate (MHP). The policy aims to limit supply and potentially boost nickel prices in the global market.

Rationale Behind the Policy

According to Tri Winarno, Director General of Mineral and Coal Affairs at the Ministry of Energy and Mineral Resources (ESDM), this measure is designed to support price recovery in the nickel market. By restricting new smelter investments, the government aims to prevent oversupply that could depress prices further. The regulation applies to both pyrometallurgical (RKEF technology) and hydrometallurgical (HPAL technology) smelting processes, covering the major production methods in the industry.

Market and Industry Implications

This policy decision reflects the government's proactive approach to managing the nickel industry's growth and ensuring its long-term sustainability. The restriction on new smelters is expected to have significant implications for both existing and potential investors in Indonesia's nickel processing sector. While it may provide opportunities for existing players to consolidate their market positions, it also poses challenges for companies that had planned to expand their operations in the country.

Future Outlook

The success of this policy will depend on various factors, including global nickel demand, production levels from existing smelters, and potential changes in the global supply chain dynamics. The Indonesian government will need to closely monitor these developments and be prepared to adjust its policies accordingly to achieve the desired outcomes for the nickel industry.