Indonesia nickel output cuts: price, supply and project impacts for miners
Reviewed by Joe Ashwell
First reported on MINING.com
30 Second Briefing
Indonesia, which produced 2.2 million tonnes of nickel in 2024, is proposing a 34% cut to 250 million tonnes of ore in its 2026 Work Plan and Budget, a move Macquarie says could trim global supply by 35% and push prices back towards US$18,000–20,000 per tonne from today’s US$14,376. Despite this, BMO’s Helen Amos still projects a 240,000-tonne surplus next year, while Nornickel forecasts 275,000 tonnes, signalling continued oversupply. Falling laterite grades and rising environmental constraints in Indonesia and the Philippines point to higher costs and potentially stronger long-term positioning for lower-footprint sulphide projects such as Canada Nickel’s Crawford deposit.
Technical Brief
- Indonesia’s 2026 Work Plan and Budget proposes cutting run-of-mine ore to 250 million tonnes.
- APNI confirms the plan is at government level only; implementation mechanisms and enforcement remain undefined.
- Nickel prices fell from a May 2024 peak of about US$21,615/t to US$14,376/t, a 34% drop.
- The March 2022 spike to US$48,078/t followed Russia’s invasion of Ukraine, distorting project price assumptions.
- Indonesia is already importing laterite ore from the Philippines due to declining domestic grades and changing ore chemistry.
- USGS data show 2024 mined nickel output of 2.2 Mt for Indonesia, 330,000 t for the Philippines, 210,000 t for Russia.
- Lateritic nickel in Indonesia and the Philippines offers lower initial mining costs but is highly energy- and land-disturbance-intensive.
- Sulphide nickel operations in Canada, Russia and South Africa generally exhibit lower energy use and environmental footprint per tonne.
- Rick Rule argues that fully internalising environmental controls on laterites will materially steepen the global nickel cost curve.
Our Take
A potential 35% cut to global nickel supply centred on Indonesia in 2026 would likely move higher-cost sulphide projects such as Canada Nickel’s Crawford project in Ontario further up the incentive curve, improving their chances of securing long-term offtake or financing despite current price weakness.
With Indonesia already at about 2.2 million tonnes of nickel output in 2024, any enforced reduction could shift marginal stainless and battery feed demand toward alternative jurisdictions like Russia and the Philippines, raising counterparty and ESG risk for buyers trying to maintain ‘sustainability’-aligned supply chains.
Among the 39 nickel-tagged pieces in our database, most recent price stories have focused on demand uncertainty; this planned Indonesian production restraint is one of the first supply-side interventions large enough to materially reprice project economics across multiple regions, from Sudbury to Sorowako.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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