Nickel Market Faces Disruption as Indonesia and the Philippines Consider Bold Policy Shifts

March 17, 2025 03:29 PM AEDT | By Team Kalkine Media

Nickel Market Faces Disruption as Indonesia and the Philippines Consider Bold Policy Shifts

Indonesia Eyes Production Cuts and Higher Royalties

Indonesia, the world’s largest nickel producer, is considering a reduction in nickel mining quotas, potentially cutting output from 272 million tonnes in 2024 to as low as 150 million tonnes in 2025. The country produced around 2.2 million metric tonnes of nickel in 2024, accounting for over half of the global supply.

Alongside these cuts, the government is also looking to increase royalty rates, potentially imposing a range between 14% and 19% for nickel miners and metal producers. The proposed measures aim to stabilize nickel prices, which have faced downward pressure due to an oversupply and weaker demand from the battery and stainless steel sectors.

China-Backed Expansion and Its Impact

Chinese investments have played a significant role in boosting Indonesia’s nickel production, leading to an influx of supply that has affected markets in countries like Australia. Companies involved in nickel mining, such as (ASX:IGO) and (ASX:NIC), are closely watching Indonesia’s policy shifts as they navigate changing market dynamics.

If Indonesia moves forward with the quota cuts, analysts estimate that global nickel supply could shrink by as much as 35%. This reduction could impact major buyers, including electric vehicle (EV) battery manufacturers and stainless steel producers, influencing global pricing trends.

Philippines Considers Nickel Export Ban

Meanwhile, the Philippines, the second-largest nickel producer, is proposing an export ban on raw nickel ore. This policy aims to encourage domestic processing and emulate Indonesia’s success in developing its downstream industry. A bill was introduced in February, sparking a debate on whether the country is ready for such a shift.

The Philippines Nickel Industry Association (PNIA) has voiced concerns that an export ban may be premature. The industry group argues that the country needs to first create an attractive investment environment for refining and processing facilities before implementing restrictive measures. Companies with operations in the Philippines, such as (NYSE:VALE) and (TSE:FM), are evaluating how these potential changes might impact their business strategies.

Global Implications and Market Outlook

As Indonesia and the Philippines move towards policy shifts, the global nickel market could see tighter supply conditions. With nickel being a key material for electric vehicle batteries and stainless steel production, any reduction in supply could drive market volatility and influence pricing strategies for major industry players.

Market participants, including mining companies and investors, are closely monitoring these developments, assessing how regulatory changes in these two nickel-rich nations will shape the future of the industry.

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