Indonesia’s new foreign exchange and coal export policies, effective from 1 March 2025, will not directly impact the nickel sector but may increase production costs and delay future projects.

Indonesia’s new policy changes

Indonesia has recently introduced two major policy changes affecting its natural resource exports. 

First, the Ministry of Energy and Mineral Resources (ESDM) mandates that all coal exports adhere to the HBA (Harga Batubara Acuan) index in terms of minimum price. Previously, exporters often used the ICI (Indonesian Coal Index), which is typically lower. This change forces exporters to adjust prices, even for existing contracts.

Second, Presidential Regulation No. 8 of 2025 requires all natural resource export revenues to be deposited in state-owned banks for at least 12 months. This policy covers mining, plantation, forestry, and fisheries but excludes oil and gas. It builds upon a 2023 regulation that required 30% of resource export earnings from shipments worth over US$250,000 to remain in the domestic financial system for at least three months. The goal is to strengthen Indonesia’s foreign exchange reserves and stabilise the rupiah (IDR).

Impact on the nickel industry

Since the re-implementation of the nickel ore export ban in 2020, Indonesia has primarily exported processed nickel products such as nickel pig iron (NPI), mixed hydroxide precipitate (MHP), high-nickel matte, and nickel sulphate. These products are not directly subject to the new regulations, allowing smelters and refiners to continue operations unimpeded.

However, the new policies could indirectly increase nickel production costs, particularly for rotary kiln-electric furnace (RKEF) plants. Indonesia, which exported more than 65% of its coal production in 2024, depends heavily on coal-fired power for nickel smelting. As coal export and production costs rise, long-term energy expenses are expected to increase, driving up overall nickel production costs and potentially delaying the completion of ongoing nickel projects.