Impact Analysis of Vale Indonesia's Nickel Mining Suspension

(a joint venture between Brazil’s Vale and the Indonesian government) has suspended nickel mining operations as its 2026 Annual Production Plan (RKAB) was not approved by the Indonesian government. The company said in an exchange statement that it expects approval to be granted soon, and this delay will not affect the sustainability of overall operations [1]. In Indonesia, all mining companies must submit an annual production plan and obtain government approval, with the government setting industry output quotas [1].

This incident comes as the Indonesian government plans to cut nickel ore production to support prices; Indonesia’s Mining Minister Bahlil Lahadalia announced that the government will cut ore production by one-third by 2026, aiming to support commodity prices and crack down on environmentally destructive operations [2].

After the news was announced,

[2]. According to the latest market data:

Price Indicator	Data	Source
LME Nickel Spot Price	$15,435/ton	December 24, 2025 [4]
LME Nickel 3-Month Futures	$15,650/ton	December 24, 2025 [4]
Recent Increase	+12.3%	After Indonesia announced production cuts [2]
Annual Price Change	-$1,650/ton	From $17,000 to $15,350 per ton [4]

Nickel prices fell to a

in December 2024, mainly due to the global market remaining in a state of structural surplus [5]. According to Fastmarkets analysis, the nickel market has been in significant surplus since 2022, and this surplus is expected to continue until [6].

Indonesia dominates global nickel supply:

• 2020 market share:
  31.5%
• 2024 market share:
  60.2%
• 2035 expected share:
  74.1%

Indonesia attracted significant Chinese investment through its nickel export ban implemented in 2020, forcing some global supplies out of the market [5].

According to forecasts by S&P Global Energy CERA analysts:

• LME 3-month nickel price is expected to reach
  $17,600 per ton
  by 2035
• The market is expected to shift to supply shortage by
  2032
  [5]

However, Argus Media predicts that nickel prices may still be under pressure in 2026, remaining in a low range of around

, as supply expansion continues to outpace demand growth [4].

Nickel is a key raw material for ternary lithium batteries (NCM/NCA), mainly used in:

• NCM 811 batteries
  : nickel content of about 80%
• High-nickel batteries
  : provide higher energy density and driving range

Indonesia’s MHP (Mixed Hydroxide Precipitate) production is expected to reach in 2025:

• 482,000 tons
  of nickel metal equivalent
• a
  nearly 50%
  increase from 2024 [4]

Cost structure analysis:

Cost Item	Cost Range
MHP Production Cost	$10,500-11,000/ton
Processing Cost to Nickel Metal	$3,000-3,500/ton
Total Cost from MHP to Nickel Metal	$13,500-14,500/ton [4]
Cost from NPI to Nickel Metal	$14,000-14,500/ton [4]

Global electric vehicle demand growth is slowing:

• 2024 growth rate
  : 26%
• 2025 growth rate
  : 23% (a 3 percentage point decrease) [4]

The slowdown in demand growth combined with the rapid expansion of Indonesia’s MHP production has led to a continuous market surplus, which actually forms a

for battery manufacturers. However, Vale Indonesia’s mining suspension and the Indonesian government’s production cut policy may change this pattern in the medium term.

Risk Factor	Impact Level	Explanation
Short-term Supply Disruption	Moderate	Vale Indonesia accounts for a limited share of global supply, and approval is expected to resume soon
Policy Uncertainty	High	There is uncertainty in the Indonesian government’s production cut policy and quota approval
Price Volatility Risk	Medium-High	Price volatility increases during the transition from surplus to shortage
Cost Increase Pressure	Medium-term	The market shift to shortage around 2032 will push up costs

• Nickel prices may experience
  short-term fluctuating increases
  , but the increase is limited due to global surplus supply
• Direct impact on new energy vehicle battery costs is
  small
• It is recommended that battery manufacturers use the current low-price window to
  increase strategic reserves

• The Indonesian government’s production cut policy may accelerate the market
  rebalancing process
• Nickel prices are expected to
  gradually recover
  between 2026 and 2028
• New energy vehicle manufacturers should consider:

1. Diversified procurement strategy
   to reduce dependence on Indonesia as a single source
2. Long-term supply agreements
   to lock in prices and quantities
3. Invest in recycling technology
   to build a closed-loop supply chain

• Progress of RKAB approval in Indonesia and approval status of other mining companies
• Specific production cut quota allocation by the Indonesian government
• Capacity adjustment of Chinese nickel projects in Indonesia
• Recovery of global new energy vehicle demand

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[1] Reuters - “Vale Indonesia halts mining activities on delayed approval for 2026 output plan” (January 2, 2026)
https://www.reuters.com/world/asia-pacific/vale-indonesia-halts-mining-activities-delayed-approval-2026-output-plan-2026-01-02/

[2] Energy News - “Nickel reaches 14-month high following Vale Indonesia’s halt to mining” (January 2, 2026)
https://energynews.oedigital.com/mineral-resources/2026/01/02/nickel-reaches-14month-high-following-vale-indonesias-halt-to-mining

[3] Bloomberg - “Vale Indonesia Halts Nickel Mining on Delayed Work Plan Approval”
https://www.bloomberg.com/news/articles/2026-01-02/vale-indonesia-halts-nickel-mining-on-delayed-work-plan-approval

[4] Argus Media - “Viewpoint: Indonesia’s MHP surge to hit nickel prices”
https://www.argusmedia.com/es/news-and-insights/latest-market-news/2767821-viewpoint-indonesia-s-mhp-surge-to-hit-nickel-prices

[5] S&P Global - “Indonesia navigates nickel market with output cuts, policy shifts”
https://www.spglobal.com/energy/en/news-research/latest-news/metals/122925-indonesia-navigates-nickel-market-with-output-cuts-policy-shifts

[6] Fastmarkets - “Monthly BRM market update 2025”
https://www.fastmarkets.com/metals-and-mining/battery-raw-materials/brm-monthly-market-update-2025/

[7] Metal.com - “Nickel Price Latest Update in the SMM Nickel Market”
https://www.metal.com/Nickel