In January 2020, Jakarta Banned Raw Nickel Ore Exports. Six Years Later, Indonesia Produces Two-Thirds of the World’s Mined Nickel.

July 24, 2026

In January 2020, Jakarta reimposed the Indonesia nickel export ban on raw ore. The rest of the nickel industry called it protectionist. Six years later, Indonesia produces approximately 67% of the world’s mined nickel. One policy decision, six years, and a single country went from a quarter of global nickel output to two-thirds.

The trajectory tells the story. Indonesia’s share of global mined nickel production was 25% in 2018, 30% in 2019. Then the export ban hit and the trajectory went vertical: 37% by 2021, 45% by 2022, 45% by 2023, 62% by 2024, and approximately two-thirds by 2025, according to USGS Mineral Commodity Summaries data across the 2020 to 2026 editions. Every one of those percentage points came at a cost to another producer somewhere in the world.

How the Indonesia Nickel Export Ban Worked: Ban, Build, and Let Chinese Capital Fund It

The playbook was simple. Ban the export of unprocessed ore. Force the construction of domestic smelters and processing plants to capture the value-add onshore. And let Chinese capital fund the buildout in exchange for offtake agreements. The nickel pig iron and ferronickel facilities went up fast. The high-pressure acid leach (HPAL) plants followed. Indonesia now hosts the fastest-growing nickel processing complex on the planet, almost entirely financed and operated by Chinese firms.

Indonesia’s nickel export revenues tell the result. They grew from approximately USD 800 million in 2020 to USD 38 to 40 billion in 2024, according to the Indonesian Minister of Energy and Mineral Resources. The value stayed in Indonesia. The capital and operational expertise came from China. The offtake went to Chinese battery manufacturers and stainless steel producers.

By 2023, Indonesia accounted for 81% of global ferronickel exports, 47% of nickel matte exports, and 59% of nickel oxide intermediate product exports. The country had transformed from a raw ore exporter into the dominant processed nickel supplier globally in under a decade. The value-add had been captured. The buyer had not changed.

What the LME Price Collapse Meant for Everyone Else

Indonesian supply flooded the market with volumes that legacy producers could not compete with on cost. The LME nickel price collapsed from above USD 30,000 per tonne to below USD 16,000 in under two years. For Australian, Canadian, and New Caledonian operations that had been running on the assumption of a sustained price in the USD 25,000 to 30,000 range, the shift was existential.

Australian nickel producers started shuttering operations in 2024. BHP suspended Nickel West, its Western Australian nickel sulphide operation that had been running for decades. Panoramic Resources, Mincor Resources, and Wyloo Metals all went into care and maintenance or administration. These were not marginal operations. They were the foundation of Western Australia’s nickel industry.

Canadian and New Caledonian operations came under the same pressure. The global nickel market had structurally repriced around Indonesian production economics, and the Indonesian production economics were built on a combination of Chinese capital, laterite ore geology, and a processing ecosystem that had been stood up at a cost and speed no Western mining sector could match. The same question hangs over the metals that did not get an Indonesia, where the copper investment gap turns on whether projects are financeable rather than on whether capital exists.

This is the kind of analysis we publish daily in The Drill Down.

Subscribe free →

Whether the Model Is Replicable Elsewhere

Everyone has an opinion on whether the Indonesian model is replicable. Zimbabwe tried it with lithium. Namibia tried it with unprocessed critical minerals. Chile is debating it with lithium brine. The results elsewhere have been mixed at best.

Zimbabwe’s lithium export ban, accelerated in February 2026 ahead of the original 2027 mandate, is the most direct attempt at replication. The intent is the same: force domestic conversion capacity to capture value-add onshore. The difference is that Indonesia had an existing industrial base, a larger resource endowment, and a Chinese investment ecosystem that was already oriented toward Indonesian processing infrastructure. Zimbabwe’s lithium processing build-out lacks an equivalent ready capital base. Jurisdictions taking the opposite route work through approvals and infrastructure rather than export restriction, as Queensland has with its State Strategic Projects framework for critical minerals.

Chile’s lithium brine debate reflects a different version of the same question: whether a state-managed processing mandate can be layered onto an established private sector operation. Chile already has the world’s most efficient lithium brine operations at the Atacama. The question is whether the downstream capture strategy requires matching the Indonesian conditions, specifically Chinese capital willing to fund the build-out in exchange for offtake, or whether it can work without that component.

The Supply Chain Lesson Nobody Was Expected to Learn This Fast

The Indonesian nickel story is a supply chain case study that the critical minerals policy community had not fully absorbed before it was already complete. The speed of the transformation, from 25% to 67% of global production in six years, is without precedent in the modern metals industry. It required the coincidence of several enabling conditions: an enormous laterite nickel reserve endowment, a government willing to absorb short-term export revenue losses, and a Chinese industrial ecosystem with the capital, technology, and appetite for exactly the kind of long-duration offtake arrangement that Indonesian processing infrastructure required.

Supply was only half of what went wrong for nickel producers. On the demand side, LFP battery market share rose from 19% to 55% between 2020 and 2025 with a chemistry that uses no nickel at all, so the volume growth the bull case assumed never arrived to absorb the Indonesian tonnes.

The lesson for Western supply chain policy is that the Indonesian model worked not primarily because of the export ban itself, but because of the capital that followed it. The ban created the investment imperative. Chinese capital answered it. If the Western critical minerals policy framework wants to replicate the supply chain capture without the Chinese capital component, it needs to substitute something equivalent: patient long-cycle capital, manufacturing scale commitments, and offtake certainty at the processing level. That combination is what the Indonesian ban unlocked.

This analysis is from The Drill Down, a daily briefing on critical minerals, junior mining, and capital markets. Join 3,200+ investors and operators who read it before the market opens.

Subscribe free →

Kamoa Capital is not licensed and does not know your circumstances. Nothing here is financial, legal or tax advice – seek professional advice and read any PDS before acting. We aim for accuracy but make no guarantees and accept no liability. Views are opinions only and may include forward-looking statements that may not occur.