More Nickel.
Who Makes the Money?

Ask whether Indonesia still sells only raw nickel, and the answer is no. The ore-export prohibition took effect in January 2020. Integrated industrial parks make nickel products and stainless steel, and a battery-cell factory was inaugurated in Karawang in July 2024. The change is real. A story that ends at the mine misses what has already been built. See the ESDM policy announcement, IMIP industrial profile and BKPM inauguration record.

What is harder to see is how much of that progress Indonesia gets to keep. A furnace can stand on Indonesian soil while its financing, specialised equipment and customers remain tied to businesses abroad. That can be a productive partnership. It can also leave the local industry with fewer choices than its size suggests. The factory’s address does not settle the question.

Our view is that the next phase needs a tougher measure of success. Tonnes and export receipts tell us the industry is large. Wages, capable local suppliers, taxes actually collected, qualified products and access to more buyers would tell us whether it is becoming stronger. That calls for a domestic income account alongside the export ledger. The royalty evidence below provides one part of it.

The industry did not begin with the export ban.

The USGS observations used here rise from 199,000 tonnes of contained nickel in 2016 to an estimated 2.6 million tonnes in 2025. That is a substantial expansion. But processing was already happening before 2020: ESDM’s 2017 record lists operating nickel smelters and matte exports for January to October that year. The ban changed the incentive to process locally. It should not be used to erase the industry that preceded it.

The price chart adds a less flattering part of the story. The 2025 benchmark average was below its 2021 level, even as Indonesia’s mine output had grown. That does not prove Indonesian supply alone caused the decline. Demand, inventories and production elsewhere also matter. It does show why output is a poor substitute for an earnings argument.

Keep the units in view. The benchmark is for high-grade nickel metal. Mine output is measured as contained nickel. Neither gives the contract price of Indonesian ore, the cost of making MHP or the margin on a particular shipment. The full USGS source series and World Bank benchmark remain available below.

The Badan Geologi provincial table places most reported contained-nickel reserves in Southeast Sulawesi, North Maluku, Central Sulawesi and South Sulawesi. That makes the industrial debate a local one as well as a national one. Power, water, transport and public services have to work where extraction and processing take place. A reserve figure says how much material has been classified. It does not say how much a province produced this year.

The industry layer marks six documented localities: Morowali/Bahodopi, Weda/Lelilef, Obi, Sorowako, Pomalaa and Karawang. They show different stages of the chain, from heavy processing in the east to a battery-cell factory on Java. Select a location to read what the source actually establishes. These points are a guide to the industry, not a complete mine register or proof that a particular mine supplied a particular factory.

Southeast Sulawesi shows how concentrated the provincial export economy is. BPS reports USD3.72 billion of Southeast Sulawesi exports in 2025, with about 95.76% in iron and steel. China, South Korea and India are among the main destinations named in that release. This supports the picture of a province tied to metals processing. It does not turn its export value into a measure of mine output or household income. BPS Southeast Sulawesi

So what does “raw material” mean here?

Ferronickel, matte and chemical intermediates have already undergone processing. Calling them all raw ore is wrong. Calling them all finished products is wrong too. They can still feed another manufacturer’s factory, where further refining or fabrication takes place. The useful question is which work happens in Indonesia, which work happens elsewhere, and what each step earns.

This is also why a dollar-per-tonne comparison can mislead. A ferronickel tonne contains iron as well as nickel. An intermediate has another composition. Ore may be reported as wet tonnes, while mine-output statistics use contained nickel. Putting those numbers side by side without a common basis creates an apparent ladder of value that the data do not support.

Why not make all of it into batteries?

Because having nickel does not, on its own, give a factory a competitive product or a customer. A plant further down the chain needs reliable inputs, consistent quality, finance and enough demand to cover its costs. Moving downstream can be worthwhile. The case still has to explain who will buy the output and why they will buy it from that plant.

Karawang shows that battery manufacturing is more than an aspiration. BKPM recorded the cell factory’s inauguration in July 2024, with a first-phase nameplate capacity of 10 GWh. The industrial test now reaches beyond nameplate capacity: sustained cell output, qualified inputs and a supply chain that connects local processing with manufacturing.

China dominates, but the product changes the picture.

In the 2024 WITS records, China received 94.3% of Indonesia’s ferronickel export value and 99.5% of the broad intermediate category. Matte had a different customer mix: China received 61.5%, and Japan 32.3%. The difference matters. A single claim that “Indonesian nickel goes to China” leaves out a meaningful part of the matte trade. The underlying ferronickel, intermediate and matte records can be checked separately.

The smaller destinations also matter. Ferronickel records include India, South Korea and the Netherlands. Matte also went to the Netherlands and Norway. South Korea received most of the intermediate trade outside China. The full table keeps even the very small reported shipments. Selecting any named country adds it to the map. The map initially shows the larger relationships.

A large buyer can help a producer build volume and plan its sales. The question is what happens when that buyer becomes difficult to replace. Can the seller find another customer at a comparable delivered price? Are the specifications, contracts or commercial relationships keeping it tied to the same market? Concentration makes those questions worth asking. It does not, by itself, prove the material was sold too cheaply.

The BPS comparison takes the argument one step further: did more product mass bring proportionately more export receipts in 2025? We keep that separate from the 2024 destination map. The datasets have different dates and customs classifications. Joining them without checking those differences would make the history look tidier than the evidence allows.

The IEA’s Global EV Outlook 2026 puts LFP at more than 55% of global EV battery deployment in 2025. Its cathode uses no nickel. That is a serious qualification to an investment story built around EV growth alone. Yet almost 80% of EV batteries deployed outside China still used nickel-containing chemistries. Nickel has not disappeared from the battery market. The market is dividing along chemistry and geography.

For Indonesia, the risk is straightforward. New battery-material plants could arrive just as the part of the market they serve grows more slowly than investors expected. Vehicle sales alone will not resolve that risk. We need to know how many nickel-containing batteries are being deployed, how much nickel they use, and whether customers have accepted the Indonesian product.

Going downstream adds another obligation: the factory must turn out material that meets specification, repeatedly. The IEA describes concentrated manufacturing expertise and the importance of controlling precursor characteristics and impurities. Chemical conversion is only part of that job. A plant that struggles with quality or utilisation can commit more capital without earning more pricing power.

There is still a credible case for future demand. In the IEA’s 2035 assessment, its base case leaves slight nickel supply gaps. If early-stage projects arrive on time in the high-production case, supply could cover demand in almost all scenarios. The investment argument therefore needs both sides of the balance. Demand growth is not the same thing as a guaranteed shortage.

An export dollar is a sale, not a dollar of Indonesian profit. Making the product may require imported chemicals, equipment and financing. Some income may belong to overseas investors. There are also domestic benefits that an export table cannot show: wages, supplier businesses, taxes and skills. We need to account for both sides before declaring the national balance.

The rules also determine how much the state collects from each product. The ministry’s 2025 fiscal review describes progressive royalties under PP 19/2025: 14% to 19% for ore, with a stated 2% exception for the integrated battery-EV industry, 3.5% to 5.5% for matte and 4% to 6% for ferronickel. These are the scheme’s stated rates, not the effective fiscal burden of every plant. Different rates make it unsafe to infer public receipts from an export total alone. 2025 fiscal review, page 53

The IEA’s ASEAN review estimates that 75% of Indonesia’s nickel refining capacity is linked to investment from Chinese companies. That helps explain the importance of overseas partnerships. It does not mean 75% of the profit leaves Indonesia. Converting one into the other would be a guess dressed as a calculation.

The better question is what the partnership leaves behind. Are local suppliers doing work that requires more skill? Can Indonesian engineers take on more of the technical decisions? Are royalties and taxes being collected as expected? Those are measurable outcomes. Buying an imported machine through a local distributor should not count as mastering the technology.

There is a regional test as well. A national export total does not tell us what happened to household income, public services, water quality or livelihoods near a mine. Those local outcomes belong in the same account as wages, supplier income and public receipts. A project can add to national exports while its benefits and costs fall on different communities.

The costs do not stop at the ore.

The IEA links Indonesian nickel refining with captive coal-fired electricity and highlights emissions, financing and market-access risks. It also identifies imported sulphur and sulphuric acid as inputs to HPAL. A domestic plant can therefore remain exposed to decisions and disruptions elsewhere.

The 2026 critical-minerals outlook gives a recent example: disrupted sulphur supplies and China’s curbs on sulphuric-acid exports in May 2026 affected processing costs across several minerals. That shows the input risk. It does not tell us what an individual Indonesian plant paid for acid.

Our concern is that today’s apparent cost advantage may be harder to maintain if customers, lenders or input suppliers change the terms. Affordable lower-emissions power and reliable chemical supply could help protect that advantage. To judge the trade-off, we would need plant-level energy, emissions and delivered-cost data. A green label cannot replace those measurements.

The export prohibition changed market access, and it came with trade-policy risk. The WTO dispute record documents the 2022 panel’s finding against the challenged measures and Indonesia’s appeal in December that year. That history matters to an investment with a long life. It does not establish that the ban ended or that the appeal has since been resolved.

Ore supply also has to fit the processing industry that has been built. In its 25 June 2026 RKAB statement, ESDM described weighing proposed revisions against smelter needs, market balance and reserves. The policy question is how to balance mine supply with the plants that depend on it. The statement is a June checkpoint, rather than a current quota estimate.

Why not cut ore supply and support the price?

If usable ore becomes scarcer relative to smelter demand, a miner may gain while a processor pays more for feed or runs its plant less often. Integrated businesses may absorb the change differently. Raising the ore price could shift income within the chain without producing an equivalent gain for the country. The answer depends on metal prices, imports, production and public revenues, not just the price paid at the mine.

Why not force every intermediate into the next factory?

That could help another stage of local manufacturing if competitive inputs, technology, finance and customers are ready. If they are not, a restriction could leave an existing product without a buyer before its successor is viable. This is a policy mechanism to test, not a claim that such a blanket prohibition has been enacted.

Judge the investment by what it changes.

Another furnace may add output. Reliable power may improve the economics of factories already built. Technical training may allow local teams to do work they previously had to buy from outside. A qualified product and another customer may widen the industry’s commercial options. Those gains require different investments, and they should be measured separately.

Our priorities would be a consistent mine-to-product account, disclosure of fiscal receipts and incentive costs, verified local environmental performance, and supplier and training commitments that can be checked after the opening ceremony. Indonesia has built substantial processing capacity. The next investments should improve the economics of that capacity and leave local teams better able to run and develop it.