Nickel Smelter Moratorium Must Continue to Support Downstreaming
JAKARTA — A proposed moratorium on the construction of nickel smelters producing semi-finished goods should be geared towards strengthening the national mineral downstreaming agenda. The government needs to promote the development of higher-value products without creating regulatory and investment uncertainty.
Bisman Bakhtiar, executive director of the Centre for Energy and Mining Law Studies (PUSHEP), said a moratorium could be consistent with the downstreaming agenda. However, the government needs a clear roadmap to determine the direction of the nickel industry’s development.
“A moratorium can go hand in hand with downstreaming, and even be aligned with it, but it needs to be directed towards developing products with higher added value. This is not about stopping downstreaming. The government needs to draw up a clear roadmap so policy changes do not create regulatory and investment uncertainty,” Bisman told nikel.co.id on Friday (16 October 2026).
He said restrictions on the construction of certain processing facilities must not be interpreted as ending the downstreaming process. Instead, the policy should form part of an effort to reorganise the industry so that nickel production increasingly focuses on higher-value products.
A measurable roadmap is also needed to give businesses certainty as they draw up plans and make investment decisions. Policy changes must also remain aligned with the goal of increasing the value added of minerals domestically.
PUSHEP calls for transparent moratorium criteria
Bisman also urged the government to set transparent criteria for the moratorium and apply them equally to businesses. Legal certainty, he said, must underpin decisions about which facilities would be subject to restrictions.
The government should also establish transition arrangements for smelter projects that have already obtained permits. This is important to safeguard investment certainty and reduce the risk of legal disputes arising from policy changes.
Controls on nickel ore production and smelter capacity should also be designed in an integrated way with the development of downstream industries.
This would allow supply-control measures to take account of raw-material requirements, processing capacity and the direction of end-product development.
“The principle is that controlling oversupply must go hand in hand with legal certainty and investment protection, in order to optimise nickel’s added value for the national interest,” he said.
Bisman said clear regulations and consistent application of the criteria would be essential to implementing the moratorium. The policy is intended to curb excess supply without obstructing the development of Indonesia’s nickel industry.
Government considers moratorium on semi-finished product smelters
Energy and Mineral Resources Minister Bahlil Lahadalia, who also serves as coordinating minister for downstreaming and the energy transition, previously said the government was considering a moratorium on the construction of smelters that continue to produce semi-finished goods.
The proposal is being considered amid a global nickel oversupply reportedly reaching around 2.5 million tonnes, which has also put pressure on international nickel prices.
Bahlil said the government wanted to reduce production of semi-finished goods and encourage industries that produce finished downstream goods directly.
“There is an oversupply, which is why prices are falling. We can consider starting to minimise semi-finished industries, and perhaps even impose a moratorium, while promoting industries that produce downstream goods directly,” Bahlil said.
The proposal puts supply controls and downstream development on parallel tracks. From PUSHEP’s perspective, implementation should also be supported by legal certainty, transparent criteria and protection for existing investments.