Indonesia is considering imposing a moratorium on the construction of new nickel smelters as part of a broader effort to address global overproduction and reinforce its domestic mineral processing industries, government officials and analysts said. The potential pause targets facilities producing semi-finished nickel products, including nickel pig iron and nickel matte, which together account for approximately 50 to 60 percent of the country’s nickel output.

Energy and Mineral Resources Minister Bahlil Lahadalia highlighted the possible restrictions as measures to strengthen Indonesia’s industrial framework amid declining commodity prices resulting from a global supply glut. Nickel pig iron, primarily used in stainless steel manufacturing, and nickel matte, a key component in electric vehicle batteries, are central to Indonesia’s mineral export profile.

The move could notably impact Chinese investors, who dominate the Indonesian nickel refining sector with an estimated 75 percent stake, according to the US-based Centre for Advanced Defense Studies. "Chinese investors are likely to be significantly affected because Chinese companies and capital play a major role in Indonesia’s nickel mining and smelting industries," said Nukila Evanty, an Indonesia-based member of the Asia Centre research institute’s advisory board.

Indonesia currently controls more than half of the world’s nickel market, reflecting the country’s expanded role in global supply chains. This dominance is partly attributed to a six-year-old ban on raw nickel ore exports, which has encouraged the growth of domestic mining and smelting capacities. The policy has attracted substantial foreign investment and sought to meet rising global demand for nickel-based products, particularly in the electric vehicle battery sector, according to political risk consultancy KRA Group analyst Rafi Adis Subarna.

While the proposed moratorium aims to curb excessive production and stabilize the market, it also signals Jakarta’s intent to prioritize value-added processing within its borders. The government’s approach reflects a balancing act between sustaining industrial growth, managing global market dynamics, and safeguarding national economic interests.

Details on the timeline or scope of the moratorium have not been finalized, and Indonesian authorities continue to evaluate its potential economic implications, especially concerning the large presence of Chinese stakeholders. Stakeholders from both the public and private sectors are expected to closely monitor developments as the government moves toward final decisions on the future of nickel smelting operations.