Indonesia to Implement Production Cuts for Nickel and Coal in 2026

Strategic Move to Stabilize Commodity Prices

The Indonesian government has announced plans to reduce both nickel and coal production in 2026 through the implementation of the Work Plan and Budget (RKAB). This strategic move aims to address the current surplus in the global market and subsequent price decline in these critical commodities ²

Addressing Global Supply Surplus

According to Meidy Katrin Lengkey, Secretary General of the Indonesian Nickel Mining Association (APNI), the global nickel surplus is expected to continue into 2026. The current surplus of 209 metric tons is projected to increase to 261 metric tons in 2026, with Indonesia accounting for approximately 65% of this surplus due to its dominant position in global nickel production ¹

Government Rationale and Implementation

Minister of Energy and Mineral Resources, Bahlil Lahadalia, explained that the production cuts are necessary to prevent further price declines. Indonesia's significant contribution to global coal and nickel supply - accounting for nearly 50% of global coal trade - has been a major factor in the current market dynamics. The government aims to use the RKAB mechanism to control production levels and ensure better market prices for both commodities ²

Economic Implications

The production cuts are expected to have several economic implications:

1. Price stabilization: Reduced supply should help in achieving better global prices
2. Revenue protection: Both state revenue and producer profitability should improve
3. Market balance: The measure aims to restore equilibrium between supply and demand
4. Compliance enforcement: The government plans to review RKAB compliance for non-compliant companies