Miner Production Cuts, Smelters Running at Low Load
As of June 2026, Indonesian Chinese-funded nickel-cobalt miners have generally cut production, with approved output in some mines reduced by half. Smelters are forced to run at low loads due to raw material shortages, and the industry's overall capacity utilization has fallen below the break-even line. Affected by new policies, raw material procurement costs have doubled while processing fees remain suppressed. Combined with foreign exchange freezes and currency depreciation, corporate cash flow is tight. Mining licenses and extraction quotas are now reviewed annually, investment projects are completely stalled, and equipment procurement demand has plummeted. Despite losses across the board, companies maintain a "partial production" status to avoid expanding sunk costs, contract breaches, and losing the policy window.
New Capacity Shifts to Brazil and Other Regions
In the short term, policy relaxation is unlikely, and small-to-medium plants may exit, leading to increased industry concentration. Long-term, new capacity will shift to Brazil, Madagascar, Oman, etc., with the role of Chinese capital in Indonesia gradually fading. For the mining equipment sector, future orders in the Indonesian market will be limited, with incremental opportunities shifting to South America, Africa, and the Middle East. The impact is limited but requires attention to subsequent policy changes.