The Indonesian Nickel Miners Association has received government approval to establish a domestic metal exchange targeting a first-half 2026 launch, as the world’s largest nickel producer seeks greater influence over global pricing after nickel ended 2024 at four-year lows. The exchange will initially focus on nickel pig iron futures contracts before expanding to other nickel products and metals, representing Indonesia’s most ambitious attempt to capture price-setting power from established exchanges in London and Shanghai.
APNI Secretary General Meidy Katrin Lengkey announced the exchange development during the Shanghai Metals Market Indonesia Critical Minerals Conference, stating the organization’s bold ambition to “control the world through nickel.” The proposed exchange will model its structure on existing systems used by the London Metal Exchange and Shanghai Futures Exchange, but aims to provide regional price discovery based on local supply and demand dynamics that complement rather than replace global reference prices.
Strategic Response to Market Concentration and Price Volatility
Indonesia’s exchange initiative addresses the country’s frustration with limited influence over nickel pricing despite controlling 56% of global mined nickel production and holding 55 million metric tons of reserves, representing 42% of world reserves. The country’s nickel output has surged from 345,000 metric tons in 2017 to 2.2 million metric tons in 2024, with production projected to reach 2.4 million metric tons in 2025, yet pricing remains dominated by foreign exchanges.
The timing reflects Indonesia’s response to sustained low nickel prices, which have pressured the country’s mining sector and government revenues. Nickel prices fell to four-year lows in late 2024, trading around $15,600 per metric ton on the LME as of April 2025, well below the $17,000 threshold that Indonesian smelters consider necessary for profitable operations under new royalty structures.
Indonesia has already demonstrated its willingness to use market power to influence prices, with authorities considering production quota cuts of up to 40% in 2025 to reduce global supply from 272 million tons to potentially 150 million tons. Such cuts would remove approximately 35% of global nickel supply, potentially driving substantial price increases while maintaining government revenues through higher royalty rates of 14-19% compared to the current 10%.
Exchange Structure and International Reception
The proposed exchange will begin with nickel pig iron contracts, the semi-refined product that represents the majority of Indonesian nickel output and serves primarily stainless steel production. The exchange plans subsequent expansion to include other nickel products such as nickel matte and refined nickel, along with other metals produced in Indonesia’s expanding processing sector.
Edric Koh from the London Metal Exchange welcomed the Indonesian initiative, acknowledging the potential value of regional price discovery mechanisms that reflect local market conditions. The LME’s support suggests recognition that Indonesia’s market dominance warrants dedicated pricing infrastructure, particularly as the country continues expanding downstream processing capabilities.
However, Daniel McElduff from Abaxx Exchange cautioned about the exchange’s commercial viability, emphasizing the need for products with genuine commercial utility that attract voluntary participation from buyers and sellers. The success of regional exchanges depends on achieving sufficient liquidity and market participation to establish credible price discovery, requirements that have challenged previous attempts at establishing alternative metal trading venues.
Downstream Integration and Processing Expansion
Indonesia’s exchange development coincides with continued expansion of domestic processing capabilities following the 2020 raw ore export ban. The country has increased its smelter count from 2 facilities in 2014 to over 30 projected by 2025, transforming Indonesia from a raw material exporter to an integrated nickel processor serving global markets.
The processing expansion includes both pyrometallurgical facilities producing nickel pig iron for stainless steel applications and hydrometallurgical plants targeting battery-grade nickel for electric vehicle applications. PT CNGR Ding Xing New Energy, a Chinese-Indonesian joint venture, became the first Indonesian producer to achieve London Metal Exchange approval for refined nickel cathode, marking Indonesia’s entry into high-purity nickel markets.
Indonesian refined nickel production reached approximately 5,500 metric tons in December 2024, with PT Dingxing maintaining continuous operations and PT Yongheng ramping production to around 1,500 metric tons monthly. Additional refined nickel projects are expected to commence operations in 2025, further diversifying Indonesia’s product portfolio beyond traditional nickel pig iron.
Regulatory Environment and Market Controls
The exchange initiative operates within Indonesia’s broader strategy of asserting control over its mineral resources through regulatory mechanisms. The government has implemented the Simbara digital monitoring system to improve revenue collection efficiency and introduced the Harga Mineral Acuan price guideline to establish domestic pricing benchmarks.
New royalty structures implemented in 2025 create progressive tiers linked to nickel prices, with rates increasing from 10% to 14-19% for nickel ore depending on market conditions. Semi-refined nickel pig iron faces royalties of 5-7%, while nickel matte carries 3.5-5.5% rates, compared to previous flat rates of 5% and 2% respectively.
The Indonesian government has also extended requirements for export earnings to be held onshore from three months to one year, effective March 2025, increasing domestic capital retention while providing additional leverage over international buyers. These measures collectively demonstrate Indonesia’s systematic approach to maximizing value capture from its nickel resources.
Market Impact and Global Implications
Indonesia’s exchange development represents a fundamental challenge to the existing global metals trading infrastructure, where price discovery has traditionally occurred through established venues in London, Shanghai, and New York. The country’s market dominance provides sufficient scale to potentially establish credible alternative pricing mechanisms, particularly for products where Indonesia holds commanding market share.
The exchange could influence global nickel markets by providing transparent pricing for Indonesian products while potentially creating arbitrage opportunities between regional and international prices. Success would likely encourage other major commodity producers to establish domestic exchanges, potentially fragmenting global price discovery and creating more complex trading relationships.
Company Background and Market Context
The Indonesian Nickel Miners Association represents the country’s nickel mining companies and has been instrumental in coordinating industry positions on government policy and international trade issues. The organization has advocated for domestic value addition and supported the government’s ore export ban while working to address operational challenges facing member companies. APNI has also developed the Indonesia Nickel Price Index to provide domestic price benchmarks independent of international exchanges.
Indonesia’s nickel industry encompasses both traditional mining companies and newer Chinese-Indonesian joint ventures established following the 2020 ore export ban. Major operations include the Hengjaya nickel-iron-cobalt mine owned 80% by Nickel Industries and the Weda Bay nickel mine operated by PT Weda Bay Nickel, a joint venture between France’s Eramet Group and China’s Tsingshan Holding Group. The industry has attracted over $30 billion in Chinese investment since the export ban, transforming Indonesia into a major nickel processing hub serving global stainless steel and battery markets.
Nickel markets continue experiencing volatility driven by electric vehicle demand growth, stainless steel production cycles, and supply chain disruptions affecting major producing regions. Indonesia’s market dominance has created concerns about supply concentration, particularly as the country implements production quotas and royalty increases that directly impact global availability and pricing. Current market dynamics reflect tensions between Indonesia’s desire for greater value capture and international buyers’ needs for stable, competitively priced nickel supplies for industrial applications.
