Singapore, January 15 (Argus) - According to market participants, Indonesia's Ministry of Energy and Mineral Resources (ESDM) is expected to revise its nickel ore Work Plan and Budget (RKAB) quota, with this year's quota expected to be between 250 million and 260 million tons.
The expected reduction will significantly lower this year's RKAB, by about one-third compared to 370 million tons in 2025, thereby intensifying supply tightness. Market views on this expected production cut are mixed. Some participants believe there could be further adjustments and that there is still room for them. Others are concerned that the supply tightness could worsen as not all quotas are typically converted into actual production, due to unforeseen circumstances such as the rainy season. Market sources say that smelters may resort to imports or be forced to lower production levels.
ESDM is evaluating the approval decision for the RKAB but has allowed nickel ore companies to continue mining at 25% of their 2026 production plan until March 31. Due to delays in the approval of the 2026 RKAB, the previously approved three-year RKAB quota is being used as a temporary measure to maintain operations. According to a notice issued on December 31, 2025, once approved, the 2026 RKAB will become the new guideline for mining and production activities.
If nickel prices remain above $18,000 per ton, the royalty rates for nickel ore, nickel pig iron (NPI), and nickel matte are also likely to increase. Notably, the royalty rate for nickel ore could rise from the current 14% to 15%, which would increase production costs. However, the price trend of nickel metal remains unstable and is influenced by market sentiment, due to uncertainties such as geopolitical tensions and Indonesia's policy plans.
