Jakarta. Indonesia is considering a moratorium on new mineral smelters that produce only semi-finished goods as the government seeks to push the downstream industry toward higher-value products and address a global nickel oversupply.

Bahlil Lahadalia, energy and mineral resources minister and coordinating minister for downstream industrialization and energy transition, said Indonesia's mineral processing industry remained heavily concentrated on intermediate products, with an estimated 50% to 60% of downstream output still at the semi-finished stage.

He said he had instructed the Energy and Mineral Resources Ministry's Directorate General of Minerals and Coal to study whether the government should continue issuing permits for smelters producing only intermediate goods or impose a moratorium.

"We need to conduct a study to determine whether it is still feasible to build smelters that produce only semi-finished products, or whether we should impose a moratorium," Bahlil said at the opening of the 2026 Mineral and Coal Convention and Exhibition (Minerba Convex) at JIExpo in Jakarta on Monday.

The proposed policy is intended to encourage investment in facilities that manufacture finished products rather than allowing semi-finished materials to be exported for further processing overseas.

"For semi-finished products intended for smelters, what we need to promote are finished goods. This is so that these semi-finished raw materials aren't all exported abroad, ensuring that Indonesia truly reaps the full benefits," he said.

Bahlil also pointed to a global nickel oversupply as a major factor behind falling prices.  "Why are prices falling? Because our production is out of control. Global demand is only 3.5 million metric tons per year. Now there's an oversupply of nearly 800,000 metric tons. How could prices possibly remain high?" Bahlil said.

Nickel Export Value Climbs After Downstream Push

Despite concerns over oversupply, Bahlil said Indonesia's downstream processing policy had significantly increased the value of nickel exports.

According to Energy and Mineral Resources Ministry data, the value of Indonesia's nickel exports rose from around US$3.3 billion during the 2017–2019 period to US$33.9 billion in 2024.

He attributed the increase to the government's 2020 ban on nickel ore exports, which encouraged investment in domestic smelting and processing facilities.

"Back when I was still at the Investment Coordinating Board (BKPM), our nickel exports from 2017 to 2019 totaled only $3.3 billion. We halted nickel exports, then built up the industry and pursued downstream processing. What happened? By 2023 and 2024, our exports had climbed to around $33 billion to $34 billion," Bahlil said.

However, he said the increase in export value did not mean Indonesia had fully realized the economic potential of downstream processing, as most domestic production remained concentrated on intermediate goods rather than finished products.

The government is therefore seeking to move the industry further along the value chain, encouraging manufacturers to produce higher-value goods domestically rather than relying primarily on the export of processed raw materials.

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