Jakarta. Indonesia is adjusting nickel ore production to ensure domestic smelters have enough raw material while preventing oversupply that could weigh on global prices, government officials and industry groups said.

The Energy and Mineral Resources Ministry has set a 2026 nickel ore production target of around 260 million metric tons, down from 320 million tons produced in 2025, as part of efforts to support prices after last year's downturn. The ministry is reviewing production quotas this month to address supply shortages at some smelters, but says any increase will be limited.

"For nickel, there is no increase except to meet the needs of smelters that are still short of supply," Director General of Minerals and Coal Tri Winarno said recently, adding that any additional quota would not be significant and was intended to prevent oversupply in international markets that could depress prices.

Nickel prices on the London Metal Exchange rose to as high as $20,000 per ton in May after Indonesia curbed production earlier this year, before easing to around $16,650 per ton in July.

Industry groups said production policy should be aligned with the needs of the country's expanding processing sector.

"If smelter offtake declines, the issue should be traced to the competitiveness of smelter products. That may not fall under the Energy Ministry's authority, but rather the Industry Ministry," Singgih Widagdo, chairman of the Indonesian Mining & Energy Forum (IMEF), told Investor Daily.

He said production increases should take into account the optimal needs of smelters, adding that lower output since the start of the year had also resulted in job losses that warranted a broader policy review.

Meanwhile, the Indonesian Mining Experts Association (Perhapi) said domestic smelters require around 350 million tons of nickel ore annually, exceeding this year's production target. The group said some smelters had already reduced or halted operations because of tighter ore supply.

"Perhapi believes Indonesia needs accurate and credible instruments and systems to balance nickel production so that the entire ecosystem—from mining to processing, refining and downstream industries—can operate according to their respective capacities and prevent oversupply that would weaken nickel prices," PERHAPI Chairman Sudirman Widhy Hartono said.

He also called for better coordination among the Energy Ministry, the Industry Ministry and the Investment Ministry to synchronize policies across the nickel supply chain, allowing Indonesia to maintain competitive prices while maximizing export earnings from the world's largest nickel industry.