Indonesia weighs halt on new nickel smelters, risking disruption for Chinese investors

Chinese nickel investors brace for headwinds as Indonesia weighs smelter freeze

Indonesia is weighing a halt to the construction of smelters producing semi-finished nickel products, a move that could disrupt Chinese investors and foreign-backed supply chains serving key industries.

The proposed restrictions are being considered as Indonesia seeks to curb global overproduction and protect local industries across its minerals sector, analysts said.

Indonesia’s state news agency Antara reported the possible halt, citing energy and mineral resources minister Bahlil Lahadalia.

The proposal comes amid a global supply glut that has driven down commodity prices.

Antara reported that the proposed restrictions would apply to new smelters producing semi-finished nickel products, including nickel pig iron and nickel matte.

Those products account for about 50 to 60 per cent of Indonesia’s total nickel output, according to the report.

That share gives the proposed policy importance for investors exposed to Indonesia’s nickel-processing industry and the wider supply chains connected to it.

Indonesia’s nickel-related supply chains feed critical sectors including stainless steel and electric vehicle batteries, meaning restrictions on new capacity could reshape how those industries source materials.

Analysts said Chinese investors could face significant disruption if Indonesia imposes a moratorium on new nickel smelters.

The proposed restrictions are also part of the energy minister’s efforts to strengthen Indonesia’s industrial structure, Antara reported.

That objective places the possible smelter freeze within a broader effort to protect local industries while responding to weakness in global nickel markets.

Source: South China Morning Post