Indah Handayani, Jakarta – Indonesia – the country with the largest nickel reserves in the world – is increasingly importing ore from the Philippines to keep domestic smelters running, according to the Indonesian Nickel Industry Forum (FINI). The group described the situation as a warning sign for the long-term sustainability of Indonesia's downstream industrialization strategy.
FINI Chairman Arif Perdana Kusumah said Indonesia, which controls around forty-five percent of global nickel reserves, or 55 million tons of nickel metal, should, in theory, be the most secure in raw-material supply. Yet the industry is now importing significant volumes from a country whose reserves are only a fraction of Indonesia's.
FINI data shows Indonesia imported 10.4 million tons of nickel ore from the Philippines in 2024, and the volume is projected to rise to around 15 million tons in 2025, worth almost $600 million.
"What makes this paradox even more striking is that the Philippines holds only about 4.8 million tons of nickel reserves – around four percent of global reserves, only one-tenth of Indonesia's," Arif said in a press statement on Friday.
According to FINI, the imports stem from domestic supply shortages and the need to blend ore to match the required silicon-to-magnesium (Si:Mg) ratio in smelter operations.
The problem, Arif argued, arises from an imbalance between the rapid construction of smelters and the slower growth of mining capacity. Nickel downstreaming is an ecosystem that depends on alignment among mining operations, smelters, markets, and government policy – and the weakest link currently lies in upstream supply.
Indonesia now has hundreds of pyrometallurgical and hydrometallurgical smelters, all requiring uninterrupted ore feed. Smelter capacity has grown dramatically over the past decade, jumping from 250,000 tons of class-two nickel in 2017 to more than 1.8 million tons in 2024, plus 395,000 tons of class-one nickel.
"The nickel downstream ecosystem is complex. When smelters keep expanding but mine planning timelines are shortened, the risk of supply shock becomes increasingly real," Arif said.
FINI also highlighted the government's decision to shorten the validity of mining work-plan permits (RKAB) from three years to one year. The change, Arif said, has made long-term mine planning more difficult, even as smelters demand a stable supply.
With soaring ore demand and shorter planning cycles, FINI warns that production imbalances may worsen.
"Shortening RKAB validity to one year creates serious challenges in maintaining supply continuity. Industry needs certainty," Arif said.
Persistent supply pressure could trigger major risks for the national nickel industry – from rising production costs and potential smelter shutdowns to weakened investor confidence, EV-battery industry disruptions, and stalled financing.
Despite the warnings, Arif stressed that Indonesia's nickel sector remains on the right strategic path, but requires a stronger upstream foundation. FINI is urging the government to reinforce exploration, improve compliance with technical mining standards, and prioritize RKAB approvals for mines that are affiliated with or integrated into smelters.
"Indonesia's grand ambitions can only be realized if one thing is guaranteed: raw materials for the national industry must never be scarce in a country that holds the largest nickel reserves in the world," Arif concluded.
Explainer: Why the Si:Mg ratio matters in nickel smelting
Nickel ore cannot be processed efficiently without meeting specific chemical parameters. One of the most critical is the Si:Mg ratio, which represents the balance of silicon (Si) and magnesium (Mg) contained in the ore.
What the Si:Mg ratio is
- Silicon (Si) contributes to slag formation during smelting.
- Magnesium (Mg) affects melting temperature and viscosity inside the furnace.
To operate smoothly and avoid equipment damage, smelters require ore with an ideal Si:Mg range, which varies depending on:
- the type of smelter (pyrometallurgical or hydrometallurgical),
- the product to be produced (ferronickel, nickel pig iron, matte, mixed hydroxide precipitate, etc.),
- and the furnace technology used.
Why Indonesia imports ore despite huge reserves
Nickel ore from different regions of Indonesia often has imbalanced Si:Mg levels, such as:
- too much magnesium -> furnace temperature becomes too high and energy use increases
- too much silicon -> excess slag formation and reduced metal recovery
To correct this imbalance, smelters blend high-Si ore with high-Mg ore to match the required ratio. When domestic ore cannot provide the right balance at scale, smelters import ore – most commonly from the Philippines – to achieve optimal Si:Mg specifications.