Cutting nickel output lifts the price, but researchers say it shrinks the prize

Indonesia stopped exporting raw nickel ore in 2014, and closed the door for good in 2020, to force companies to smelt the metal at home. That part worked. The argument now is what to do with what was built. Writing for Fulcrum, three energy researchers, Muyi Yang, Dody Setiawan and Dinita Setyawati, say the government has picked the easier of two paths: taking a bigger share of the money nickel already earns, instead of making nickel earn more.

The tools are all new rules. Jakarta raised royalties, the fee a miner pays the state on what it digs up. It now requires earnings from natural-resource exports to be kept inside the domestic financial system. And it has tightened the RKAB, the annual work permit that sets how much each mine may produce, cutting the 2026 quota to roughly a third below last year's level to hold prices up. The authors call this redistribution: the pie stays the same size, and the state takes a larger slice. The alternative they want is upgrading, moving past smelting into midstream fabrication, the work of turning refined metal into parts and components. That factory stage supports four to five times as many jobs as processing ore does, but it needs steady rules, trained workers and local suppliers.

Their warning is about what quiet investors do when rules change at short notice: they shelve expansion plans and put the money somewhere else. Behind that sits a bigger risk. Battery makers can skip nickel entirely by using lithium iron phosphate, a cheaper chemistry already led by the Chinese firms CATL and BYD. If nickel looks expensive and unpredictable, buyers switch chemistry, and Indonesia's biggest industrial bet loses its customer.

Why it matters

If you live in a smelter town in Central Sulawesi or North Maluku, the quota is really your work roster, and less ore mined means fewer shifts and less money moving through the local shops, even as the state collects more per tonne. Nickel is also one of the few large things Indonesia sells that is not a plain raw commodity, so it carries part of the export earnings that hold the rupiah up. Watch how much notice miners get before the 2027 quota is set, because the timing now matters as much as the number.