Indonesia's Ministry of Energy and Mineral Resources (ESDM) has announced that it will not approve any broad increase in the national nickel production quota, maintaining a policy aimed at preventing oversupply and supporting global nickel prices.

The ministry stated that exceptions will only be considered for domestic smelters facing immediate raw material shortages, and any approved increases will be limited in scope.

"There will be no increase for nickel, except to catch up on smelters that are still short of supply," ESDM Director General of Minerals and Coal Tri Winarno said in Jakarta.

According to Tri, any quota adjustments intended to stabilise feedstock availability for domestic smelters will not be significant. The government's primary objective is to prevent market oversupply, which could place downward pressure on global nickel prices.

The decision follows growing market speculation over whether Indonesia would permit a broad revision of nickel work plans and budgets (RKABs) after the mid-year evaluation period. Despite maintaining strict production controls, Tri encouraged eligible mining companies to submit any pending RKAB revision proposals before the July 31st, 2026 deadline.

Under ESDM Ministerial Regulation No. 17 of 2025, mining companies may apply for RKAB adjustments after submitting their second-quarter periodic reports and before July 31st of the current year. However, ministry officials stressed that submitting a revision request does not guarantee approval, as all applications must undergo a comprehensive regulatory review process.

Reflecting the government's tighter approach to production management, Indonesia has capped its national nickel production quota for 2026 at between 250 million and 260 million tons. This represents a substantial reduction from the 379 million tons allocated under the 2025 RKAB framework.

The reduction follows significant supply-and-demand imbalances that affected international coal and nickel markets throughout 2025. Since Indonesia first announced plans in December 2025 to exercise stricter control over national nickel production, global nickel prices have shown an upward trend. The ministry expects that continued production discipline will help limit oversupply and support a gradual recovery in global nickel prices.

Ecopro expands Indonesian nickel supply chain

The Indonesian government's tighter control over new nickel smelter approvals comes as South Korea's Ecopro Group moves to strengthen its long-term nickel supply chain through additional investments in Indonesia.

Ecopro Group announced that its investments in Indonesian nickel smelting operations are expected to secure sufficient nickel to support the production of approximately 1.5 million electric vehicles. This volume is equivalent to South Korea's total annual domestic vehicle sales, including both electric vehicles and internal combustion engine vehicles.

According to the company, Ecopro BM conducted investor relations briefings for domestic and international institutional investors between July 3rd and July 10th, during which it outlined the background to its ongoing rights offering, the intended use of proceeds and its broader investment strategy.

A key component of the plan involves acquiring a stake in the BNSI nickel smelter through an investment funded by the rights offering. The company stated that the move is intended to strengthen its ability to respond to evolving international regulatory requirements at a time when Indonesia is restricting approvals for new nickel smelters.

Nickel produced at the BNSI facility is classified as Non-Prohibited Foreign Entity (Non-PFE) material and complies with Foreign Entity of Concern (FEOC) guideline standards. As a result, the material can qualify for electric vehicle tax credits while avoiding restrictions associated with the Foreign Entity of Concern provisions under the United States Inflation Reduction Act (IRA).

The BNSI investment forms part of Ecopro Group's broader strategy to expand its nickel supply chain in Indonesia following its initial investment in the Indonesia Morowali Industrial Park (IMIP).

During the first phase of the programme, Ecopro invested approximately 800 billion won (US$ 530 million) over four years, securing annual access to 29,000 tons of nickel. The company subsequently committed 1.5 trillion won in a second-phase investment, enabling it to secure an additional 36,000 tons of annual nickel supply.

Combined, the two phases provide Ecopro with supply rights to approximately 65,000 tons of nickel per year, sufficient to support the production of around 1.5 million electric vehicles.

Ecopro BM is scheduled to hold a shareholders meeting on July 16th, during which management plans to explain the rationale behind the rights offering and provide further details on the planned use of funds, including efforts to localise and strengthen the Indonesian nickel supply chain.

The company's expansion plans come as Indonesia continues to position itself as a key supplier of battery materials while simultaneously tightening production controls to balance domestic industrial development with global market stability.