More than half of the nickel circulating in the global market now comes from a single country: Indonesia. In 2024, Indonesia produced 2.28 million metric tons of nickel, accounting for over 60% of the world’s supply. It is no surprise, then, that the country is often referred to as having the world’s largest nickel reserves.
This scale is powerful enough to disrupt operations elsewhere. It has contributed to the shutdown of nickel mining projects in Australia, pushed global prices downward, and forced major industrial nations to rethink their supply chain strategies.
In less than a decade, Indonesia has transformed a nickel trade deficit into an export surplus worth more than 30 billion US dollars. This shift began with a bold policy, the ban on raw ore exports introduced in 2020.
A Ban That Reshaped the Global Nickel Map
Before 2020, Indonesia mainly exported nickel in its most basic form, raw ore with minimal added value. The downstreaming policy completely cut off that route and required processing to take place domestically.
The result was dramatic. Nickel export value increased tenfold compared to 2013 levels and stabilized above 30 billion US dollars by 2022.
The impact has been felt across the global supply chain. Imports of nickel matte into China, a semi-finished material used in battery chemicals and metal alloys, rose nearly 28 times between 2020 and 2023, with more than 90% coming from Indonesia.
At the same time, the combined share of nickel production from North and South America dropped from 16% to 7%, while Europe declined from 35% to 10%.
This dominance has even led to the closure of major mining operations. BHP’s Nickel West operations and the West Musgrave project in Western Australia were halted. Both were directly linked to oversupply from Indonesia, which drove prices down to levels that are no longer profitable for higher-cost producers.
Volume Without Full Control
Behind its dominant production figures lies a striking gap: Indonesia controls the volume, but not fully the industry itself.
Chinese companies hold around 75 percent of Indonesia’s nickel smelting capacity. Tsingshan Holding Group and CATL dominate the downstream sector, while Indonesia’s state-owned mining firms remain largely confined to the role of raw material suppliers.
This imbalance creates what is often described as a technology trap. Indonesia has built smelter capacity, but has yet to fully master high-value nickel production processes, from advanced welding and precision casting to electric vehicle battery cell chemistry.
Dependence on foreign technology has slowed the transfer of expertise that downstreaming policies were meant to achieve in the first place.
The implications are now extending into geopolitics. The United States, through the Inflation Reduction Act, is actively promoting supply chains that reduce reliance on what it defines as a “foreign entity of concern.”
Because Indonesia’s nickel industry is closely tied to Chinese capital, batteries produced in Indonesia risk being excluded from the U.S. market. This places Indonesia at a crossroads between two competing economic ecosystems.
Rich Resources Facing Pressure
Sulawesi sits at the center of this story. The island holds the world’s largest nickel reserves and accounts for more than half of global mined nickel production.
However, price pressure is a factor that cannot be ignored. Nickel prices on the London Metal Exchange are projected to fall to around 15,478 US dollars per ton in 2025, down from 17,052 US dollars per ton in 2024.
At the same time, Indonesia’s all-in sustaining cost margins are expected to shrink by 38 percent. Even so, margins remain positive, meaning local producers are still profitable, although with tighter profit space.
To balance supply and prices, the Indonesian government now requires all mining companies to submit annual production quotas for 2026 operations by October 2025. This is part of a broader policy to control output volumes amid falling prices.
In the long term, Indonesia’s nickel production is projected to more than double, reaching 4.97 million metric tons by 2035. With an exploration budget of 113.8 million US dollars in 2024, the largest in the Pacific and Southeast Asia region, the groundwork for sustained dominance is actively being built.
