Legal Literacy - Minister of Energy and Mineral Resources, Bahlil Lahadalia plans to cut the production quota for several strategic mining commodities such as coal and nickel. The purpose of this planning is to maintain price stability in the global market while improving the governance of the national mining sector. Bahlil assesses that the production carried out so far has been excessive and commodity prices have recently fallen. Reducing the mining production quota is seen as a strategic step to suppress excess supply so that commodity prices are maintained in the global market. Through production cuts, the government hopes to create a new balance that is more economically beneficial.
The surge in nickel mining production targets and realizations in recent years cannot be separated from the government's downstreaming policy. This has happened since nickel ore was completely prohibited from being exported in 2020 and is required to be processed domestically. Nickel ore mining activity, as a raw material, has also increased significantly. Executive Director of the Center for Energy and Mining Law Studies Bisman Bakhtiar, Friday (26/12/2025), said, mining production cuts nickel is the right step in order to maintain the supply and demand for nickel. Until now, there has been no signal that nickel prices will strengthen again. Bahlil has not set out the details of the Indonesian mining production cuts in the RKAB, including for nickel.
However, the plan to cut the mining production quota is inseparable from fundamental problems, especially regarding the effectiveness of the policy in responding to global market dynamics. The decline in coal and nickel prices is not solely due to high domestic production, but also due to weakening global demand, economic slowdown in industrial countries, and changes in the structure of energy and raw material consumption. In this context, reducing production at the national level risks not having a significant impact on price recovery, while the economic impact is directly felt domestically.
The main problem with the plan to cut the mining production quota lies in the fact that the decline in commodity prices is not entirely caused by high national production. Data shows that Indonesian coal production in 2024 reached around 836 million tons, far exceeding the initial target, and although projected to decline, the volume in 2025 is still in the range of 760–790 million tons. On the other hand, in the first semester of 2025 alone, coal production has reached 357.6 million tons, with around 238 million tons exported. However, this high volume is not directly proportional to price strengthening, as global demand is weakening due to economic slowdown and energy transition in major consumer countries. This condition indicates that domestic supply correction is not necessarily effective in raising prices if the main pressure comes from global demand.
A similar situation also occurs with nickel commodities. Since the implementation of the nickel ore export ban in 2020, mining activities have increased significantly to meet the needs of the processing industry domestically. The Indonesian Nickel Miners Association noted that in the first half of 2025 there was an oversupply of nickel ore, which also put pressure on nickel prices in the international market. Even until the end of 2025, there were no strong signals that nickel prices would rebound. In such conditions, the planned production quota cuts are indeed aimed at balancing supply and demand, but without clarity on the amount of cuts in the 2026 Work Plan and Budget (RKAB), the policy creates uncertainty for businesses and mining-producing regions.
The uncertainty of these reduction details has the potential to have further impacts on the domestic economy.
A sudden decrease in production can hamper mining industry activities, suppress employment, and reduce economic turnover in regions that have depended on the mining sector. At the same time, the need for raw materials for the nickel downstream industry continues to increase, so unmeasured production cuts risk creating a new imbalance between the upstream and downstream sectors. Without careful calculation, policies intended to stabilize prices can shift economic risks from the global market to the domestic market. To overcome these problems, mining production quota reduction policies should not be implemented separately, but rather designed as part of a planned medium-term strategy. The government needs to present a more predictable production scheme, for example by setting a quota range for the next few years based on global demand projections and domestic industry needs. This step is important to reduce uncertainty for businesses and mining-producing regions, while minimizing the economic impact of policy changes that are too sudden.
On the other hand, production arrangements must be accompanied by strengthening the utilization of commodities in the domestic market. Specifically for nickel, quota adjustments need to be synchronized with the capacity and needs of the processing industry so as not to cause raw material shortages. With this approach, production control is not solely aimed at maintaining prices, but also at ensuring the sustainability and efficiency of the mining value chain. Without integration between the upstream and downstream sectors, the reduction policy has the potential to hinder the industrialization agenda that has been promoted.
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