In a move that is rapidly redefining the nickel market's supply calculus, Indonesia has slashed its national nickel ore RKAB (Rencana Kerja dan Anggaran Biaya) quota for 2026 to between 250 and 270 million tonnes — down roughly 30% from the 379 million tonnes approved in 2025. The policy shift is the most aggressive supply intervention Jakarta has undertaken in the nickel sector to date.
The scale of the cut becomes clear when measured against smelter demand. Analysts at ING estimate that Indonesia's rapidly expanding smelter fleet — comprising NPI, HPAL, and ferronickel operations — requires between 340 and 350 million tonnes of nickel ore annually to run at nameplate capacity. The new quota creates a theoretical ore supply deficit of 80 to 100 million tonnes, a void that cannot easily be filled from external sources.
This is not an accident. The Indonesian government, under the direction of President Prabowo Subianto, has explicitly embraced ore-quota management as a policy lever to support domestic processing margins, extend resource life, and exert influence over global nickel prices. The strategy has drawn comparisons to OPEC's management of oil supply, with analysts at S&P Global dubbing Indonesia the "OPEC of one" for nickel.
"This is a deliberate supply squeeze designed to test how much pricing power Indonesia has," said a base metals strategist at a European bank. "They're betting that the rest of the world cannot quickly replace Indonesian ore, and so far that bet is holding."
ING's May base metals outlook projects a global refined nickel surplus of 261 kt for 2026 — a figure that already reflects a narrowing from earlier forecasts. However, the analysts note that tighter RKAB enforcement on the ground could meaningfully reduce that surplus. If Indonesian NPI output falls by 50–100 kt on ore constraints, the global surplus could shrink to 150–200 kt or less, a level at which price floor dynamics start to shift.
Importantly, the quota system is not uniform. Smaller miners with limited reserves have borne the brunt of the cuts, while larger integrated players with captive smelting capacity have received relatively more favourable allocations. This creates a bifurcated supply chain where ore availability depends as much on corporate structure as geology.
The market response has been measured but increasingly attentive. LME three-month nickel has held above $18,800/t since mid-May, with the RKAB news providing consistent downside support even as broader macro headwinds — including a stronger dollar and cautious risk appetite — cap the upside.