Indonesia’s Nickel Regulations Expected to Push Up Production and Market Prices

Indonesian Nickel

HMA pricing, royalty hikes, and export holding rules may reshape costs for NPI and other nickel products.

Indonesia’s latest regulatory changes to its nickel industry could raise production costs and drive up global nickel product prices, according to market participants. The government has introduced several measures in recent months, including a new pricing benchmark, royalty revisions, and capital controls on export revenue.

In March 2024, the Ministry introduced the Harga Mineral Acuan (HMA) — a price reference model to guide nickel transactions. The government also proposed a progressive royalty rate under the Pendapatan Negara Bukan Pajak (PNBP) system, which scales with market prices. Additionally, the mandatory onshore holding period for export proceeds was extended from three months to one year, effective 1 March.

Tightened Controls and Monitoring May Reshape Nickel Economics

To improve revenue transparency, Indonesia also launched Simbara, a digital monitoring system for mineral and coal mining sectors, in July 2024. These measures aim to enhance governance and taxation but may create operational challenges for producers.

Industry sources expect these policies to raise operating and financing costs, especially for nickel pig iron (NPI) producers. Although NPI has historically been the cheapest form of nickel, ongoing regulatory pressure and tighter ore supply could reverse its oversupply status by 2025.

HMA and LME Price Link May Shrink NPI Price Gap

The new HMA pricing structure may reduce the price spread between NPI and London Metal Exchange (LME) nickel prices. Analysts believe this could alter the calculation of Harga Patokan Mineral (HPM) — the national benchmark price — resulting in higher spot and long-term prices.

Moreover, expectations that the second-half March HMA will rise alongside LME price increases indicate further cost pressures ahead, particularly for Indonesian NPI producers.