Nickel Downstream Investment Hits Rp71 Trillion, APNI Highlights Supply Certainty Concerns
The Indonesian Nickel Miners Association (APNI) has recorded that investment in nickel downstream processing reached Rp71 trillion in the first half of 2026, comprising Rp41.5 trillion in the first quarter and Rp29.4 trillion in the second quarter. This makes nickel the mineral commodity with the largest cumulative investment value, signalling strong investor appetite for the national downstream agenda.
However, APNI Secretary General Meidy Katrin Lengkey stated that the industry is now at a crucial juncture, facing uncertainty over the supply of raw materials. The government has indicated that the general Work Plan and Budget (RKAB) quota for nickel ore in 2026 will not be increased from the range of 260 million to 270 million tonnes, a sharp decline from the realised production of 379 million tonnes in 2025. The government is only open to selective quota revisions for smelters experiencing raw material shortages.
Domestic nickel ore consumption from January to July 2026 has already reached 142.96 million tonnes, or approximately 53 to 55 percent of the total quota. APNI assesses that this consumption rate is higher than the pro-rata calculation, meaning industry needs could approach or even exceed the lower limit of the quota before the year ends.
This uncertainty is beginning to influence investor behaviour. For the first time, investment in bauxite reached Rp40.1 trillion in the second quarter of 2026, surpassing nickel investment for that period. APNI views this as a signal that some investors are adopting a wait-and-see approach amid the unclear quota revision process. Nevertheless, cumulative nickel investment for the first half remains the largest.
The substantial investment has been accompanied by an expansion in processing capacity. The national smelter base now comprises 80 facilities, including 55 rotary kiln electric furnaces, 11 high-pressure acid leach plants, eight nickel matte facilities, and six integrated stainless steel plants. APNI estimates that if all smelters operate at full capacity, the annual ore requirement could reach approximately 315 million tonnes, far exceeding the current RKAB quota range.
To address this, APNI proposes that the government formalise the 2026 RKAB quota at 270 million tonnes and provide a strategic buffer of 30 million tonnes to meet actual smelter needs. The association also highlights the pressure from rising costs of supporting materials, particularly sulphur used in mixed hydroxide precipitate production via HPAL. The average import price of sulphur reportedly surged from US$104 per tonne in the first quarter of 2024 to US$817 per tonne in the second quarter of 2026, briefly exceeding US$1,100 per tonne in June 2026. With around 80 percent of sulphur supply dependent on the Middle East, this price spike has driven up HPAL operational costs by more than 30 percent.
Looking at long-term sustainability, APNI notes that Indonesia holds approximately 5.31 billion tonnes of nickel ore reserves with a metal content of 52.47 million tonnes, but the reserve-to-resource ratio is only about 30.5 percent. At current extraction rates, the lifespan of saprolite ore, the primary feedstock for RKEF smelters, is estimated at only nine to 15 years, whereas limonite reserves have a much longer outlook.
APNI is calling for a comprehensive long-term strategy to maintain the competitiveness of Indonesia’s nickel industry, which now controls around 60 percent of global supply. The association notes that the realised export price of Indonesian nickel has risen to approximately 89 percent of the London Metal Exchange reference price, up from 79 percent a year earlier. APNI believes this positions Indonesia to transform from a price taker to a price influencer, provided supply discipline, ESG standards, and governance of supporting raw materials are consistently maintained. The association is urging the government to establish a transparent, rules-based framework for RKAB revisions, maintain the moratorium on new class-two RKEF smelters, prioritise HPAL investments with dry-stacking tailings technology, and develop a National Nickel Resource Strategy 2045 with exploration incentives to improve the reserve-to-resource ratio.