Indonesia grows nickel industry to dominate global supply
Updated
Updated · NPR · May 7
Indonesia grows nickel industry to dominate global supply
14 articles · Updated · NPR · May 7
The country now produces more than half of global nickel output after a decade-long expansion, with most supply used for stainless steel and the remainder for batteries in electric vehicles and data centres.
Jakarta wants nickel to underpin Indonesia's role in the green-energy transition, but mining and processing remain environmentally damaging and have harmed local livelihoods.
The industry’s rise highlights tension between booming demand for metals used in cleaner technologies and the social and ecological costs of extracting them.
As China controls Indonesia's nickel, can the West build an alternative supply chain to secure its green future?
With 90% of profits leaving the country, is Indonesia's nickel boom a new form of resource colonialism?
Is the global green transition creating an environmental sacrifice zone in Indonesia?
Indonesia’s 34% Nickel Production Quota Cut in 2026: Market Impact, Environmental Costs, and Global Strategic Challenges
Overview
In early 2026, Indonesia sharply cut its nickel ore production quota by 34%, triggering a rapid 30% surge in global nickel prices. Despite this, supply continues to outpace demand, largely due to China’s shift to lithium iron phosphate batteries that reduce nickel use, and the expansion of Indonesian smelting capacity driven by heavy Chinese investment. This has led to a global nickel oversupply and rising inventories. The quota cuts have caused supply shortages for domestic smelters, forcing imports from the Philippines and prompting regional cooperation. Meanwhile, Indonesia faces environmental challenges from coal-powered smelting and aims to cut emissions by 90% by 2050, though fossil fuel subsidies and weak governance pose obstacles to this goal.