Key facts
- Indonesia is considering a freeze on new nickel smelter construction.
- The proposed moratorium aims to curb global overproduction and protect local industries.
- Chinese investors have expressed concerns over abrupt policy shifts and alleged extortion by officials.
- Nickel ore quotas for 2026 were reduced by the Indonesian Ministry of Energy and Mineral Resources.
- Several major Chinese-backed nickel smelters in Indonesia are facing operational difficulties and production cuts.
Indonesia is considering a moratorium on new nickel smelter construction, a move that could significantly disrupt Chinese investors who have poured billions into the sector. The proposed halt aims to curb global overproduction and protect domestic industries, according to Energy and Mineral Resources Minister Bahlil Lahadalia.
The Indonesian government has implemented stricter policies, including reduced nickel ore quotas and increased taxes and levies, which have led to discontent among Chinese firms. An open letter from the China Chamber of Commerce in Indonesia (CCCI) to President Prabowo Subianto detailed these grievances, signaling a collective protest that was also copied to the Chinese embassy.
Key Chinese players are already feeling the impact. Tsingshan, Indonesia's largest nickel investor, saw its mine quota slashed by over 70% for 2026. Huayou Cobalt paused about half of its production capacity, and Brunp Recycling has faced disruptions to its nickel feedstock supply. The financial strain is also evident, with PT Gunbuster Nickel Industry (GNI) placed under debt restructuring. Other smelters like PT Huadi Nickel Alloy Indonesia have reportedly ceased operations, and PT Wanxiang Nickel Indonesia is operating with reduced capacity.