Indonesia's government is considering restricting or suspending new semi-finished nickel smelting projects and shifting investment priorities toward downstream industries capable of producing final goods.
Bahlil, Indonesia's Coordinating Minister for Downstream Industries and Energy Transition, who also serves as Minister of Energy and Mineral Resources, said in a statement released on October 8 that the government will coordinate policies across the investment, industry, and energy ministries to push resource processing further into the final manufacturing stage.
Re-screening smelting projects to ease nickel oversupply
Speaking at the Investor Daily Summit held in Jakarta on October 7, Bahlil proposed that the government needs to distinguish which industrial projects should continue to be developed and which should have their expansion limited or new construction suspended.
His team is preparing formal recommendations to submit to President Prabowo to determine which industrial segments will be restricted.
Bahlil linked this consideration to global oversupply in the nickel market and pressure on prices.
He said the government is assessing the long-term direction of the nickel industry, balancing the sustainable use of mineral reserves with the upgrading of the domestic industrial structure.
Indonesia currently produces semi-finished nickel products including ferronickel, nickel pig iron, nickel matte, and mixed hydroxide precipitate.
These products still require further processing before they can enter the final manufacturing stage.
The focus of the policy discussion is to reduce new capacity that remains at the intermediate processing stage and to prioritize higher value-added downstream projects.
After nickel export growth, government seeks to expand domestic manufacturing value
Bahlil noted that Indonesia has kept nickel ore processing within the country, but a large share of smelted products is still exported in semi-finished form, continues to be processed overseas, and then re-enters the Indonesian market as finished goods.
The government wants to complete this industrial chain and increase domestic participation in the manufacturing stage.
According to figures released by Bahlil, Indonesia's nickel product export value rose from about US$3.3 billion in 2017-2018 to US$34 billion in 2023, and he expects it could reach US$38 billion to US$40 billion in 2026.
However, he believes that expanding smelting and semi-finished exports alone is still not enough to complete industrial upgrading.
The government's resource downstream roadmap covers 28 commodities, involving minerals, coal, natural gas, fisheries, agriculture, plantations, and forestry.
Bahlil said cross-ministerial projects will be coordinated, and industrial distribution will be extended beyond Java to areas close to raw material sources, while providing participation opportunities for local enterprises and small and medium-sized businesses.
Battery and supporting manufacturing projects continue to advance
Indonesia's projects aimed at final manufacturing are also being implemented.
On October 8, the Weda Bay Industrial Park in Maluku province held activities for project groundbreaking, commercial operations, and the first export of electric vehicle batteries.
Rosan, chief executive of Indonesia's investment management agency Danantara, said the park's 10 strategic projects involve total investment of about US$10.2 billion.
Among them, four projects have entered the commercial operation and export stage, with investment of about US$3.4 billion; the other six projects have entered the construction stage, with investment of about US$6.8 billion, covering areas such as nickel-based battery materials, electrolyte for electric vehicle batteries, electric mining heavy equipment, and photovoltaic glass.
Rosan said that in the first half of 2026, the resource downstream industry's share of Indonesia's realized investment had reached 30%, higher than the previous level of about 25%; more than 75% of investment in this sector flows to areas outside Java.