How do Indonesia's new nickel pricing rules and export controls affect Chinese smelters and global supply chains?

How do Indonesia's new nickel pricing rules and export controls affect Chinese smelters and global supply chains?
Indonesia's 2026 policy package—cutting mining quotas by over 30%, raising the benchmark price coefficient for low-grade ore from 17% to 30%, and charging for associated metals like cobalt, iron, and chromium—has doubled processing costs for Chinese smelters operating there. The new rules also force export earnings into Indonesian state banks for 12 months and require export through a state agency, effectively locking capital and disrupting direct buyer relationships. Chinese firms, which invested over $14 billion in Indonesia's nickel industry over the past decade, are responding by halting new projects, cutting RKEF line utilization to 60%, and even dismantling and shipping equipment back to China. This raises the risk of supply disruption for battery-grade nickel and nickel pig iron, potentially tightening global markets if the exodus accelerates.