Historic price cut boosts nickel prices
Nickel prices rebounded sharply following the Indonesian government’s announcement to drastically reduce production at the world’s largest nickel mine. The move is aimed at curbing the global oversupply that has pressured prices over the past two years.
Production in Weda Bay will be capped at 12 million tons this year, well below the previously established quota of 42 million tons. The adjustment represents a clear signal of government intervention to stabilize the market.
In immediate reaction, the benchmark contract on the London Metal Exchange rose nearly 2%, approaching US$18,000 per ton, levels not seen since 2024.
Indonesia reduces more than 100 million tons
The real structural impact is in domestic policy. The authorities confirmed that total nickel ore production quotas will be reduced by more than 100 million tons, from 379 million in 2025 to an estimated range between 260 and 270 million this year.
Indonesia is not a minor player. The country accounts for approximately two-thirds of the world’s refined nickel production, consolidating its position as the largest global producer in just a decade.
The cut seeks to reverse the oversupply that kept the nickel price below $20,000 for 18 consecutive months.
Weda Bay and global supply dominance
The Weda Bay mine is operated by the French mining company Eramet and the Chinese giant Tsingshan Holding Group.
The complex is one of the pillars of the Indonesian industrial strategy, which since 2020 has banned the export of unprocessed ore to force the installation of refineries in the country.
Thanks to this policy, Indonesia went from accounting for just 6% of global refined supply in 2015 to nearly 65% by 2025, an unprecedented transformation in the industrial metals market.
Impact on global mining companies and market 2026
The previous plunge in nickel prices affected large western producers. The Australian mining company BHP closed nickel operations due to oversupply. For its part, Anglo American is making progress in the sale of its assets in this segment.
Even Brazil’s Vale suspended operations in Indonesia when it did not receive the necessary quotas for 2026.
The market now anticipates that, if the cuts are sustained, the nickel price could start a structural upward cycle, especially considering its strategic role in batteries for electric vehicles and stainless steel.
Source: https://www.ft.com/
Photo: Shutterstock