JAKARTA, RAKYAT NEWS – The potential reduction in nickel production has raised significant concerns among smelter business owners in Indonesia. The Ministry of Energy and Mineral Resources (ESDM) is reportedly considering a cut in the nickel ore production quota from 272 million tons to 150 million tons for the upcoming year.

This proposal aims to increase the global price of nickel, which is a vital raw material for battery production.

Although this decision has not yet been finalized, the Indonesian Smelter and Refining Industry Association (AP3I) is keeping a close watch on the developments.

AP3I Secretary-General Haykal Hubeis warns that limiting nickel production could lead to higher operational costs for smelters. With fewer raw materials available for processing, smelters may face rising costs, and their revenues could potentially decrease as a result.

Additionally, Haykal notes that smelter businesses may need to adjust their workforce numbers to manage these higher operational costs. The reduced availability of nickel ore could force businesses to operate less efficiently, further straining their financial stability.

In response to this potential change, Haykal urges the government to consider providing a transition period before implementing any restrictions on production. This would allow smelters, particularly smaller companies, time to adjust to the new production levels. He stressed that smelting businesses vary in capacity and resources, so a transition phase would ensure a smoother adjustment process for all.

While Haykal acknowledges the possible benefits of limiting production, he believes it should be done with caution. Limiting production could stabilize or even raise nickel prices in the global market, which would be beneficial for producers. It could also contribute to extending the life of Indonesia’s nickel mines and help reduce environmental impacts associated with overproduction.

However, he also points out that such restrictions could undermine investor confidence. If seen as government intervention in the market, these measures may cause concerns among investors who could perceive it as a threat to market stability.

The Director General of Mineral and Coal at ESDM, Tri Winarno, has indicated that the government is considering production limits to prevent an oversupply of nickel and maintain high market prices. He mentioned that the geopolitical tensions globally make this strategy more relevant. However, he did not provide specific details regarding when these restrictions would be enforced.

Meanwhile, Deputy Minister of ESDM Yuliot Tanjung refrained from confirming or denying the rumored production cut. He mentioned that the ministry would first review the production plans submitted by mining companies before making any decisions.

He also emphasized that the government would continue its nickel downstreaming program to ensure that domestic industries have adequate access to the material while increasing its added value in the country. (Uki Ruknuddin)

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