Indonesia’s nickel industry is increasingly importing ore from the Philippines to keep its expanding network of smelters operating, a development industry players say signals structural strain in the country’s downstream industrialization agenda.

The Indonesian Nickel Industry Forum (FINI) reported that Indonesia imported 10.4 million tons of nickel ore from the Philippines in 2024, with the figure expected to surge to 15 million tons in 2025, valued at nearly US$600 million.

FINI Chairman Arif Perdana Kusumah called the situation a paradox for a nation that controls roughly 45 percent of global nickel reserves, or 55 million tons of nickel metal.

“Indonesia should be the most secure country in terms of raw-material supply,” Arif said as quoted in a statement on Friday, November 21, 2025.

“Yet we are importing significant volumes from the Philippines, whose reserves are only a fraction of ours,” he added.

According to FINI, the Philippines holds just 4.8 million tons of nickel reserves, about 4 percent of global supply, or one-tenth of Indonesia’s.

Supply-demand gap

FINI attributes Indonesia’s rising imports to domestic supply shortages and the need to blend ore to achieve the silicon-to-magnesium (Si:Mg) ratio required by smelters.

Arif noted that the core issue lies in the widening gap between rapid smelter construction and slower growth in mining capacity.

“Nickel downstreaming is an ecosystem dependent on alignment among mining, smelting, markets, and policy. The weakest link right now is the upstream supply,” he said.

Indonesia’s smelting capacity has ballooned over the past decade. Pyrometallurgical and hydrometallurgical smelters now number in the hundreds, collectively requiring massive and continuous ore feed. Production capacity for class-two nickel jumped from 250,000 tons in 2017 to over 1.8 million tons in 2024, while class-one nickel output reached 395,000 tons.

“When smelters keep expanding but mine-planning timelines are shortened, the risk of supply shock becomes increasingly real,” Arif warned.

Policy shifts add pressure

The government’s move to shorten the validity of mining work-plan permits (RKAB) from three years to one year is making long-term planning more difficult, FINI said.

With soaring ore demand and tighter planning cycles, the group warns of worsening production imbalances.

“Shortening RKAB validity creates serious challenges in maintaining supply continuity. Industry needs certainty,” Arif said.

Persistent pressure on supply, FINI argues, could pose systemic risks to Indonesia’s nickel ambitions from rising production costs and potential smelter shutdowns to investor hesitation, EV-battery supply disruptions, and stalled financing for new projects.

Stronger upstream base

Despite these challenges, Arif emphasized that Indonesia’s overall strategy remains sound, but requires urgent reinforcement at the mining level. FINI is calling on the government to strengthen exploration efforts and enforce technical mining standards, and prioritize RKAB approvals for mines linked to smelters.

“Indonesia’s grand ambitions can only be realized if one thing is guaranteed: raw materials for the national industry must never be scarce especially in a country that holds the largest nickel reserves in the world,” Arif said.