Full Breakdown
Indonesia’s Nickel State in Formation: Prabowo’s Centralising Push
6/15/2026, 12:53:23 PM
Prabowo Administration Tightens State Control Over Nickel
Since October 2024, President Prabowo Subianto has rolled out a package to tighten state control of Indonesia’s nickel sector. A February 2025 export-proceeds rule (GR No. 8/2025) requires 100 % of resource earnings to stay in domestic banks, exempting the US. PP No. 19/2025 raised royalties on minerals and coal, including nickel. Quotas now follow a one-year cycle; the 2026 mining quota was cut from 379 million tons to about 260-270 million tons. Danantara began investing in a US $1.42 billion HPAL project with China’s GEM. On 20 May 2026, Prabowo told Parliament that exports of strategic commodities would be routed through a body, starting with coal and palm oil, then all minerals.
Policy Evolution from Jokowi to Prabowo
Indonesia’s nickel policy began with the 2009 Mining Law, encouraging domestic processing, and a 2014 ore-export ban that forced onshore value addition. The 2020 ore-export ban accelerated Chinese investment in HPAL and nickel-pig-iron facilities. In Joko Widodo’s 2014-2024 term, Indonesia’s share of global nickel supply rose from 31.5 % in 2020 to 60.2 % in 2024, while Chinese firms controlled at least 75 % of refining capacity. Prabowo inherited this structure and chose tighter state intervention instead of expanding domestic ownership or technology transfer.
Production Data and Fiscal Instruments
Indonesia produced 2.6 million tons of nickel in 2025, 60.2 % of global output (3.9 million tons). Mining and quarrying contributed about 9 % of GDP and 17 % of export value. The export-proceeds rule, higher royalties and a reduced quota aim to boost fiscal capture. Danantara, launched February 2025, invested in a US $1.42 billion HPAL project with GEM. In 2025 the government revoked four Raja Ampat permits and issued a National Nickel Industry Decarbonisation Roadmap.
Official Statements & Government Rationale
President Prabowo told Parliament that routing exports through a state-backed body would “address under-invoicing and revenue leakage.” The administration framed the export-proceeds rule as a way to keep resource earnings within the national financial system and improve fiscal stability.
Criticism, Investor Concerns, and Environmental Issues
The China Chamber of Commerce warned in May 2026 that tighter restrictions were disrupting business operations and eroding investment confidence. Environmental groups noted overcapacity, pollution and social costs, while the speed of policy rollout was described as outpacing capacity to implement measures effectively.
Conflicting Outlooks and Gaps
Although 83 % of Indonesia’s 2025 nickel output went to stainless-steel, the EV market is shifting toward lithium-iron-phosphate batteries, which made up nearly half of 2024 sales, contain no nickel and cost about 30 % less than nickel-rich chemistries. This shift creates uncertainty about future nickel demand and highlights the absence of a clear roadmap linking policy to long-term industrial capacity.
Implications for the Global Nickel Market and Future Steps
Indonesia’s choke-point status forces non-Chinese buyers to accept terms set by Prabowo’s administration, linking short-term fiscal gains to friction with foreign investors and possible supply instability. The state export body is slated for 2026, and critical-minerals agreements with the United States, Japan and South Korea continue. The Decarbonisation Roadmap will guide compliance, and further policy tweaks may be needed to align investor expectations with Indonesia’s strategic goals.
