Indonesia produces around 60% of the world’s nickel, a metal used to manufacture batteries for electric vehicles (EVs) – more than any other country in the world. But in 2026, the government sharply reduced how much of its nickel can be extracted from the ground.

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Production quotas were reduced by around 40% this year compared to 2025. Weda Bay, the largest nickel mine on Earth, had its allowance cut by more than 70% and exhausted its full-year quota by the end of May, halting mining entirely; it cannot resume large-scale extraction until next year unless regulators grant an extension.

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Production quotas were introduced to stop the collapse of nickel prices because of oversupply in the market. Prices had fallen more than 40% in 2023 alone and kept sliding as Indonesian supply kept growing, hitting a four-year low of around $13,900 a ton in late 2025.

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Chinese industry groups representing companies that have invested billions to mine and refine the country’s nickel were furious ... A report by the China Global South Project, a think tank focusing on China, says that Indonesia’s ambitions toward a more sustainable production collide with Chinese investors’ expectations,

... in mid-May 2026, an open letter from the China Chamber of Commerce in Indonesia (CCCI) landed on President Prabowo Subianto’s desk. The document delivered a sharp message: abrupt policy shifts and alleged extortion by officials were undermining confidence in Indonesia, and Chinese commerce expected the government to take some immediate action.

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Chinese firms control about 75% of Indonesia’s nickel refining capacity, with Tsingshan and Jiangsu Delong alone accounting for more than 70%. The estimated $14 billion invested over the past decade is embedded in smelters, HPAL processing plants, and integrated supply chains calibrated to Indonesian ore. These assets cannot be relocated.

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But much of that Chinese capital is sunk into smelters and processing plants built specifically to run on Indonesian ore, and cannot simply be moved elsewhere. That gives Jakarta more room to hold its ground than the warning suggests.

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