The Indonesian Nickel Miners Association (APNI) has called for urgent control over production and the implementation of national Environmental, Social and Governance (ESG) standards, following growing concerns over the structural oversupply of nickel that is putting downward pressure on prices and harming upstream industry players.

A recent report from an international agency reveals that over 50 percent of the global nickel supply now comes from Indonesia. However, global demand, particularly from the battery and stainless steel sectors, has not been able to absorb this surge in supply. As a result, global nickel prices continue to decline, margins are shrinking, and pressure on mining permit holders (IUP) is intensifying.

“We cannot just focus on increasing capacity without considering demand. This is the time for the government to implement production control and adjust the direction of downstream development,” Meidy Katrin Lengkey, Secretary-General of APNI, said as quoted in a statement on Thursday, July 31, 2025.

Data from FERROALOY reveals that Indonesia’s NPI (Nickel Pig Iron) production has been steadily increasing year after year, while the contribution of FeNi (Ferro Nickel) remains small. This indicates a strategy of volume expansion without evaluating market absorption capacity.

In addition to production control, APNI also advocates for the implementation of national ESG standards as a commitment to sustainable mining practices. This measure is also essential for maintaining export market access, particularly to countries that demand transparency on environmental and social issues.

APNI hopes the government will review the RKAB (Mining Work Plan), HPM (Mineral Price Policy), and the direction of downstream development to ensure that the national nickel industry remains competitive and sustainable amidst global challenges.

Indonesia has become the world’s leading nickel producer, holding over 50 percent of the global market share. However, aggressive production expansion without proper control has created an oversupply that is driving down prices and jeopardizing the long-term viability of nickel mining and processing operations.

Main issues

• Excessive smelter production capacity (HPAL & RKEF)
• Insufficient downstream demand to absorb output
• Significant decline in LME and SMM prices
• Many smelters operating at a loss
• ESG pressure from global markets
• One-year RKAB, increased VAT, royalty, and fiscal regulations that are not adaptive

Impact

• Declining sales prices
• Unviable downstream economics
• Gap between regulations and market realities
• Threats to the survival of the national industry

APNI recommendations

• Moratorium on new smelter expansions until balance is achieved
• Maintain three-year RKAB
• Revise HMA/HPM policies to reflect real costs & market conditions
• Develop a downstream roadmap based on global demand
• Establish national ESG standards
• Diversify export markets and create incentives for high-quality projects

Without policy intervention, Indonesia risks entering a prolonged boom-bust cycle. APNI urges collaborative efforts to restructure the national nickel industry for a healthier, more competitive, and sustainable future.