Indonesia mines more nickel than any other country, producing more than 60% of the world\u2019s supply. For about a decade, Jakarta has pursued \u201cdownstreaming\u201d \u2014 a strategy to move beyond exporting raw ore and up the value-added chain.<\/p>\n
In 2026, Indonesia sharply cut<\/a> the amount of ore companies are allowed to mine under its annual mining permit system, known locally as the RKAB. Approvals fell to roughly 260 million to 270 million tons nationwide, down from 379 million tons the year before \u2014 a cut of about a third.<\/p>\n Weda Bay, the world\u2019s largest nickel mine, is jointly owned by China\u2019s Tsingshan (51.3%), France\u2019s Eramet (37.8%) and Indonesia\u2019s state miner Antam (10%). Its output was slashed<\/a> by more than 70%, and mining there halted entirely by the end of May.<\/p>\n Critics, particularly in China, argue this proves downstreaming has failed. Their reasoning: If the processing industry had truly succeeded, why restrict the raw material it depends on?<\/p>\n That argument assumes the goal was always to maximize nickel output. It wasn\u2019t. Three separate changes made alongside this year\u2019s mining cuts reveal the real goal: not less nickel, but nickel worth more by the time it leaves the country.<\/p>\n The first change concerns what kind of factory gets to exist. Indonesia has stopped<\/a> approving new licenses for plants that produce only basic, early-stage products such as nickel pig iron \u2014 an alloy used mainly in stainless steel \u2014 and matte, a crude intermediate that still needs significant further refining.<\/p>\n So far, Indonesia has faced a \u201chollow middle\u201d in its industry, with midstream nickel processing lagging in investment.<\/p>\n New factories are still allowed, but only if they commit to refining further \u2014 into materials used in EV batteries, such as nickel sulfate or cathode material, the part of a battery that stores energy. That\u2019s not abandoning the nickel industry; it\u2019s raising the bar for what counts as building one.<\/p>\n The second change concerns who gets the raw material. The quota system now rewards companies for moving further down the value chain, rather than treating every miner the same.<\/p>\n Nickel Industries, an Australian miner, received an increased 2026 quota<\/a> specifically because it is building a plant designed to produce battery-grade material rather than raw ore. The company is positioned to seek further increases tied to that same buildout later this year.<\/p>\n Companies investing in the advanced end of the industry get more access to ore; companies doing only basic processing don\u2019t. Ore is increasingly steered toward the parts of the industry Jakarta wants to grow, rather than handed out on a first-come, first-served basis to whoever wants to dig.<\/p>\n The third change \u2014 and the clearest evidence of intent \u2014 is in how Indonesia prices the ore itself. In April 2026, the government rewrote the formula<\/a> used to set the minimum price miners must be paid, and that minimum rose significantly.<\/p>\n For the first time, other valuable metals mixed in with the ore \u2014 cobalt and iron, which carry their own pricing factor, and chromium, a smaller one \u2014 are priced and paid for, rather than handed to processors for free as they had been for years.<\/p>\n That moves real money out of processors\u2019 margins and into miners\u2019 pockets, and indirectly into state revenue, regardless of how many tons get mined.<\/p>\n Together, the three changes show that Indonesia isn\u2019t just mining less. It\u2019s restructuring who\u2019s allowed to build what, who gets first claim on the ore and how much that ore is worth once it changes hands \u2014 all pointing in the same direction.<\/p>\n The market backs this up \u2014 this isn\u2019t just theory. Nickel pig iron, the basic product Indonesia already produces in abundance, remains oversupplied and cheap: The global surplus was estimated<\/a> at about 212,000 tons in 2025 and is expected to grow this year.<\/p>\n The more advanced battery-grade materials, meanwhile, are tight enough that prices<\/a> jump whenever a major producer signals a slowdown \u2014 exactly the reaction that shows up when supply hasn\u2019t kept pace with demand.<\/p>\n Plentiful basic material, scarce advanced material: That\u2019s precisely the gap the three changes are designed to close, and the price data shows the gap is real \u2014 not something invented after the fact to justify the cuts.<\/p>\n There\u2019s a simpler logic underneath the detail, too. Indonesia\u2019s own boom helped flood the world with nickel and push prices down, hurting profits even at factories processing record volumes.<\/p>\n