Indonesia plans to slash nickel production by a third next year as the world’s dominant supplier seeks to halt a two-year price decline that has shuttered mines globally.
The Southeast Asian nation will reduce its mining quota to 250 million tonnes in 2026, down 34% from current levels, according to the Indonesian Nickel Miners Association.
Nickel trades near multi-month lows around $14,400 per tonne, roughly 30% below peaks reached in May 2024. Indonesia produced 2.2 million tonnes in 2024, capturing 63% of global output, a dominance analysts compare to OPEC’s control of oil markets.
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The country already trimmed its 2025 quota to 200 million tonnes from 215 million tonnes, but prices kept falling. London Metal Exchange stockpiles exceed 250,000 tonnes after rising 90,000 tonnes this year.
Mark Selby, chief executive of Canada Nickel Company, told an industry conference this month that declining ore quality drives the cuts.
“Because grades and chemistry of the ores have been dropping, Indonesia imports ore from the Philippines,” Selby said. “That’s the equivalent of Saudi Arabia importing oil from Iran or Iraq.”
Related: Over 90% of Philippine nickel ore still goes to China
Macquarie Group estimates the cuts could remove 35% of global supply if fully implemented. The supply glut has forced closures at higher-cost operations in Australia, New Caledonia and other regions as Indonesian output undercuts competitors.
Russia’s Nornickel projects a market surplus of 275,000 tonnes in 2026, up from 240,000 tonnes this year. Analysts remain divided on whether cuts will revive prices, with forecasts ranging from $15,500 to $15,730 per tonne through 2026.
Demand faces headwinds as Chinese electric vehicle manufacturers increasingly adopt lithium-iron-phosphate batteries, which contain no nickel, over nickel-rich chemistries. Stainless steel production accounts for roughly 70% of nickel consumption but shows insufficient growth to absorb expanding supply.
The Indonesian government has not finalized implementation details, according to APNI Secretary General Meidy Katrin Lengkey.
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