Twice within six weeks, unconfirmed reports about a potential loosening of Indonesia's nickel-mining production quotas triggered immediate declines in London nickel prices — before any official policy change had been made. The episodes, analysed by Petromindo, underscore how decisively Indonesia has come to influence global nickel supply, and how uncertainty about its production policy can move markets in the absence of confirmed decisions. The most recent episode unfolded on August 6, 2026, when reports emerged suggesting that one of Indonesia's largest nickel mines could receive a substantial increase in its ore quota for the second half of the year.
PT Weda Bay Nickel was subsequently identified as the company in question. The Ministry of Energy and Mineral Resources (MEMR) confirmed that Weda Bay had applied for an increase in its 2026 Work Plan and Budget, known as RKAB, but stressed that the request remained under assessment and disclosed no volumes. No additional allocation had been officially approved.
Despite the absence of any formal approval, the market reacted immediately. According to Petromindo, three-month LME nickel fell as much as 3.2% to $16,565 a tonne on August 6, its lowest level in nearly three weeks, amid renewed speculation that Indonesia could grant a major mine a substantial additional quota. A near-identical pattern had played out in June.
On June 18, MEMR stated that the national nickel-production target remained at between 260 million and 270 million tonnes and that there had been "no directive" to relax it, while allowing companies to apply for RKAB revisions during July. Six days later, media reports suggested Indonesia was considering raising its nationwide 2026 nickel-ore allocation to 360 million tonnes from around 260 million tonnes. MEMR rejected the figure, saying no such decision had been made.
On the same day, the daily three-month LME nickel price fell to $16,825 a tonne on June 24 from $17,295 on June 23, a decline of $470, or 2.72%. The two episodes highlight a persistent information gap between Indonesia's official policy signals and supply figures circulating in the market. An unconfirmed, company-level application reached traders before the status and scope of the request had been officially clarified, allowing it to reprice market assumptions about future Indonesian supply.
The context behind Weda Bay's application is well-documented. According to Eramet's interim financial report published on July 29, Weda Bay received an initial 2026 RKAB allocation of 12 million wet metric tonnes, including 3 million tonnes for internal sales — a figure more than 70% below its approved volume in 2025. In 2025, Weda Bay had initially received 32 million tonnes before that allocation was revised upward to 42 million tonnes.
Eramet confirmed the mine entered care and maintenance in May 2026 after exhausting its initial 2026 quota. Eramet said Weda Bay submitted a revision request in July, describing it as consistent with volumes authorized in previous years and necessary to address demand from the Indonesia Weda Bay Industrial Park, whose annual ore requirements it estimated at more than 110 million tonnes. Neither the volume requested nor any indication of MEMR approval was disclosed.
The supply-restriction policy had earlier supported prices. On April 27, benchmark three-month LME nickel rose 2.3% to $19,445 a tonne at 0900 GMT, after touching $19,470, compared with $18,800 on April 24. Market reporting attributed the rally primarily to concerns over tighter Indonesian nickel-ore availability following lower 2026 RKAB allocations, compounded by higher sulphur costs and potential disruptions to sulphur supply threatening operating rates at Indonesian high-pressure acid leach plants.
That scarcity premium, however, depended on traders believing the restrictions would hold. The August reaction demonstrated how rapidly that assumption can be repriced when an unconfirmed company-level figure enters circulation. The supply tension is structural.
The Indonesia Nickel Industry Forum, known as FINI, estimates that installed rotary-kiln electric-furnace and high-pressure acid leach capacity could require approximately 340 million to 350 million wet metric tonnes of nickel ore in 2026, substantially above the initial national framework. In July, MEMR said revisions would be limited to addressing shortages at domestic smelters and that it did not intend to approve a major national increase. Actual nickel-ore production reached 320.37 million tonnes in 2025, above the national framework of roughly 260 million to 270 million tonnes set for 2026, and well below the approximately 379 million tonnes authorized that year.
The disclosure question has become central to the debate. Officials have argued that publishing individual company allocations could generate volatility in international commodity markets. Energy and Mineral Resources Minister Bahlil Lahadalia has stated that revealing revised production volumes could affect global prices.
Yet as Petromindo's analysis notes, the June and August episodes expose the paradox: limited company-level disclosure may be intended to prevent volatility, but the resulting information vacuum gives unconfirmed figures greater power to shape market expectations. Petromindo's analysis suggests Indonesia could reduce this uncertainty without compromising commercial confidentiality by disclosing the aggregate national quota after each revision round, clearly separating applications from technical recommendations and final approvals, publishing the criteria for additional allocations, and periodically reconciling authorized quotas with realized production. An RKAB establishes an authorized ceiling but does not guarantee that the full volume will be extracted.
Weather, ore grades, logistics and operational capacity can keep realized output below permitted levels. Markets nevertheless use authorized quotas as one of the clearest available indicators of future Indonesian supply. Indonesia introduced RKAB controls to manage oversupply and support nickel prices.
Without greater transparency over the status of quota decisions, however, the analysis warns that the instrument itself risks becoming a source of volatility rather than a stabilizing mechanism. As Petromindo concludes, Indonesia has become nickel's de facto supply-policy setter. Its next challenge is ensuring that the information architecture supporting that power does not also make it the market's volatility setter.
Source: Petromindo, by Adianto P. Simamora, August 10, 2026.
Source: petromindo.com