ESDM Confident Nickel Production Will Be Cut in 2026: Here Are the Reasons

Jakarta, CNBC Indonesia - The Ministry of Energy and Mineral Resources (ESDM) said the nickel production target in this year’s Work Plan and Budget (RKAB) is in the range of 260-270 million tonnes. The production target, lower than last year, is intended to sustain the life of the ore reserves and bolster commodity prices in the global market.

Director General of Minerals and Coal (Minerba) at the Ministry, Tri Winarno, explained that controlling production is crucial given that Indonesia’s total nickel reserves currently stand at about 5 billion tonnes. He warned that if exploitation proceeds massively, the endurance of Indonesia’s nickel reserves would be exhausted in less than two decades.

‘If it continues, it will be drained continuously; we won’t reach 20 years, it’s finished. While seeking new reserves, we also rein it in,’ Tri said at the Ministry of Energy and Mineral Resources office in Jakarta, quoted on Wednesday (4/3/2026).

According to him, Indonesia currently plays a vital role as the world’s 65% nickel producer. However, high production levels had occasionally led to an oversupply of around 250,000 tonnes, which pushed the commodity price down to around US$14,000-15,000 per tonne in recent years.

‘Here we have the product but we can’t do anything; it turns out the oversupply was around 250,000 tonnes of Ni. So we are trying to move toward that (price control),’ he added.

The strategy of supply control through production cuts is starting to show positive effects on price movements.

Tri noted that after signals of production restrictions were conveyed by the ESDM Minister Bahlil Lahadalia, nickel prices began to creep up to around US$17,000 per tonne and even touched US$18,000 per tonne.

‘Not just the endurance of reserves. China is not currently mining nickel. So if we continue to mine, and then when prices are high, there is nothing left? What natural resources can we consider to substitute for our revenue or for our workforce,’ Tri explained.

Regarding the needs of the processing industry (smelters), which require 310 million tonnes or more than the RKAB quota, the government opened up the option of fulfilling raw materials through imports from the Philippines and possibly revising the RKAB in the second half of the year.

However, Tri emphasised that the government’s main focus at present is to maintain supply and demand balance for a better price for the country.