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Indonesia cuts nickel mining quota 30% and drives HPAL sulphur costs up 567%

Jakarta's 2026 RKAB allocation of 270Mt (down from 379Mt) tightened feedstock; acid costs near $1,000/t and HPAL utilisation fell to 70-75%

Minerals·resource-nationalism· worsening Whose Money·The Quiet Shift ·6 takes · ·rbtfl upd Jun 25, 2026

Summary

Indonesia, which controls 60.2% of global nickel mine output, cut its 2026 RKAB (mining quota) to 260-270 million wet metric tonnes, down from 379Mt in 2025, a roughly 30% reduction. The primary stated objective is to support the LME nickel price in the $19,000-$20,000/t range after a prolonged slump, combined with ore-reserve conservation and stricter environmental compliance. The cut has had two cascading effects. First, feedstock tightness for High Pressure Acid Leach (HPAL) plants pushed utilisation rates down from 90% in 2025 to an estimated 70-75% in 2026. Second, the closure of the Strait of Hormuz and a concurrent Chinese sulphuric acid export ban drove input acid costs from $150/t to nearly $1,000/t, a 567% increase, inflating per-tonne production costs across the HPAL sector. The International Nickel Study Group projects a 2026 deficit of 32,000t, reversing a 2025 surplus of 283,000t.

The split

Indonesian government framing, via Energy Minister Bahlil Lahadalia, is that the cut is rational resource stewardship: conserve high-grade laterite ore, force price discovery above the cost floor, and accelerate domestic downstream value-capture. Western and Australian mining coverage (Northern Miner, Crux Investor) reads the cut as a structural repricing event that makes Indonesian laterite production permanently more expensive, not a temporary squeeze. EV battery manufacturers sourcing mixed hydroxide precipitate (MHP) and nickel sulphate are most exposed. The sulphuric acid cost spike compounds the RKAB tightening: even HPAL operators with quota allocations face margin compression because imported acid has become a strategic input during the Hormuz closure.

By the numbers

  • 270Mt, Indonesia's 2026 nickel ore mining quota (RKAB), down from 379Mt in 2025.
  • 60.2%, Indonesia's share of global nickel mine production.
  • 70-75%, estimated 2026 HPAL plant utilisation, down from 90% in 2025.
  • ~567%, increase in imported sulphuric acid cost (from ~$150/t to ~$1,000/t) in 2026.
  • 32,000t, projected 2026 global nickel market deficit (INSG), reversing a 283,000t 2025 surplus.
  • $17,635/t, LME nickel peak reached mid-April 2026 (up 37% from late December 2025).

Why it matters

Indonesia's nickel policy is the most consequential single-country decision in the battery-metals complex. HPAL plants process laterite ore into battery-ready nickel sulphate and MHP for NMC cathodes; a sustained 15-20 point drop in utilisation tightens supply of battery-grade nickel at exactly the moment grid storage and EV demand are growing fastest. The sulphuric acid cost spike, driven by geopolitical events far from Indonesia (Hormuz) and Chinese export policy, reveals how supply chains that look domestically controlled are actually exposed to global chokepoints. Indonesia's resource-nationalism model has demonstrated that unilateral volume control can force a market re-rating, which is precisely what the DRC is attempting in cobalt.

What to watch

  • Whether Indonesia raises the 2027 RKAB to ease the acid and HPAL utilisation crunch or keeps the volume cap.
  • Sulphuric acid prices once the Hormuz situation and Chinese export posture normalise.
  • HPAL project viability reviews: operators facing $1,000/t acid costs are recalculating feasibility.
  • LME nickel price: can it sustain the $19,000-$20,000/t government target once surplus material in transit works through?