Indonesia to Implement Production Cuts for Nickel and Coal in 2026

Government Intervention to Stabilize Commodity Prices

The Indonesian government, through the Ministry of Energy and Mineral Resources (ESDM), has announced plans to reduce production targets for nickel and coal in the 2026 Work Plan and Budget (RKAB) ²

. Minister Bahlil Lahadalia stated that this decision aims to balance supply and demand in the commodity market, which has been experiencing excess supply and declining prices ²

Source 2

https://finance.detik.com/berita-ekonomi-bisnis/d-8268608/produksi-nikel-batu-bara-dipangkas-tahun-depan-ini-alasannya

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Industry Response to Production Targets

Despite the national production target reduction, PT Vale Indonesia Tbk (INCO), a major nickel producer, has confirmed that it will maintain its proposed production volume for 2026 as submitted in the RKAB ¹

. The company is currently progressing with several smelter projects that are nearing completion. INCO's management has not disclosed the specific production volume planned for next year.

Rationale Behind Production Cuts

The decision to cut production targets comes as global commodity prices, particularly for coal, have been under significant pressure. Minister Bahlil explained that the current global coal trade of 1.3 billion tons per year is contributing to the price decline ²

. By reducing production targets, the government aims to prevent further price deterioration and maintain market stability.

Impact on Mining Sector

The production cut policy will likely have significant implications for both the nickel and coal mining sectors in Indonesia. While some producers like INCO are maintaining their production plans, others may need to adjust their strategies in response to the new national targets. The policy represents a proactive approach by the government to manage natural resource extraction and maintain economic stability in the mining sector.