Indonesia produced approximately 1.8 million tonnes of nickel in 2025, accounting for roughly 50% of global output. The country's 2020 ban on raw nickel ore exports has been a transformative industrial policy, forcing downstream processing to take place domestically and attracting over $30 billion in Chinese investment for smelting, refining, and battery material production. LME nickel prices traded at approximately $16,000 per tonne in March 2026, down from their 2022 spike above $100,000 but well above the pre-ban average.
The Value-Add Strategy
Before the export ban, Indonesia shipped raw laterite ore cheaply to China and Japan for processing. The ban forced companies to build processing facilities in Indonesia, creating the Morowali and Weda Bay industrial parks in Sulawesi and Halmahera islands. These zones now host smelters, battery-grade nickel plants, and even cathode precursor facilities that produce materials directly used in EV batteries.
The strategy succeeded in capturing more value. Indonesia's nickel export revenue rose from approximately $8 billion in 2019 to over $33 billion in 2023. The country now produces battery-grade nickel sulphate, mixed hydroxide precipitate (MHP), and nickel pig iron, moving up the value chain from raw material exporter to industrial processor.
Environmental Costs
The rapid expansion has come at significant environmental cost. Open-pit mining and coal-powered smelters have generated deforestation, soil erosion, and air pollution concerns. Several international automakers, including Tesla and BMW, have expressed reluctance to source Indonesian nickel due to sustainability concerns. The Indonesian government has responded with plans for hydroelectric and geothermal power at industrial parks, though progress has been slow.
Geopolitical Implications
Indonesia's nickel dominance gives it significant leverage in the global energy transition. The US Inflation Reduction Act's requirement for critical mineral sourcing from "friendly" countries has complicated matters, as Chinese-owned firms dominate Indonesian nickel processing. This has led to discussions about bilateral agreements that could count some Indonesian nickel as IRA-eligible.
For nickel market data, visit London Metal Exchange Nickel. For Indonesian mining data, see Indonesian Ministry of Energy.