Key Takeaways
- • Indonesia's Ministry of Energy and Mineral Resources (ESDM) issued Ministerial Decree No. 144.K/MB.01/MEM.B/2026 on April 13, 2026, revising the nickel ore benchmark price (HPM) formula, effective April 15, 2026, raising price floors across all nickel ore grades.
- • The correction factor (CF) for 1.6% grade nickel ore increased from 17% to 30%, with associated adjustments of 1% per 0.1% change in nickel grade; cobalt and iron correction factors set at 30%, chromium at 10%.
- • The revised formula now includes valuation of associated minerals—cobalt (threshold ≥0.05%), iron, and chromium—with cobalt subject to a 2% tax rate, significantly increasing processing costs for HPAL plants and other downstream operators.
- • Estimated full cost of nickel pig iron (NPI) production will rise to $15,741.51/mt Ni, an increase of $570.48/mt Ni from previous levels, according to SMM analysis; nickel futures on the London Metal Exchange rose 2.6% to a one-month high following the announcement.
- • A major Indonesian stainless steel mill suspended offers immediately after the decree issuance, signaling market expectation of higher downstream stainless steel prices and cost pressures on processors already facing Middle East supply disruptions.
Summary
Indonesia's ESDM implemented substantial revisions to its nickel ore benchmark pricing methodology on April 15, 2026, through Ministerial Decree No. 144, amending the previous Decree No. 268 from 2025. The revised formula fundamentally alters how benchmark prices are calculated for nickel ore and processed nickel products, affecting all nickel mining companies and their downstream processors. The policy represents the government's effort to increase state revenue amid budgetary pressures linked to geopolitical disruptions affecting commodity markets.
The core revision elevates correction factors applied to nickel ore grades and introduces formal pricing for associated minerals previously not fully valued in benchmark calculations. The correction factor for 1.6% grade nickel ore nearly doubled from 17% to 30%, with a sliding scale adjustment of 1% for every 0.1% variance in nickel grade. Critically, the formula now incorporates valuation of cobalt (when present at ≥0.05%), iron, and chromium, with cobalt and iron correction factors set at 30% and chromium at 10%. Cobalt associated with nickel ore is subject to a 2% tax rate, directly increasing the cost basis for integrated operations.
According to Shanghai Metals Market analysis, these adjustments will elevate the full production cost of nickel pig iron (NPI) to $15,741.51/mt Ni—an increase of $570.48/mt Ni from previous levels. This cost escalation particularly impacts high-pressure acid leach (HPAL) plants processing lower-grade ore destined for electric vehicle battery applications; these operations are already under margin pressure from elevated sulfur prices caused by Middle East supply disruptions. In response to the decree's announcement, a major Indonesian stainless steel mill suspended offers, signaling market expectations of higher stainless steel pricing downstream. London Metal Exchange nickel futures rose 2.6% to a one-month high following the announcement, reflecting market recognition of tightened cost floors.
The policy creates a two-tier impact on Indonesia's nickel processing industry, which accounts for over 50% of global output. High-grade ore remains largely insulated due to existing market prices trading well above government benchmarks, but lower-grade material will face material price increases, compressing margins for HPAL and downstream stainless producers already navigating elevated input costs from geopolitical supply constraints.
The core revision elevates correction factors applied to nickel ore grades and introduces formal pricing for associated minerals previously not fully valued in benchmark calculations. The correction factor for 1.6% grade nickel ore nearly doubled from 17% to 30%, with a sliding scale adjustment of 1% for every 0.1% variance in nickel grade. Critically, the formula now incorporates valuation of cobalt (when present at ≥0.05%), iron, and chromium, with cobalt and iron correction factors set at 30% and chromium at 10%. Cobalt associated with nickel ore is subject to a 2% tax rate, directly increasing the cost basis for integrated operations.
According to Shanghai Metals Market analysis, these adjustments will elevate the full production cost of nickel pig iron (NPI) to $15,741.51/mt Ni—an increase of $570.48/mt Ni from previous levels. This cost escalation particularly impacts high-pressure acid leach (HPAL) plants processing lower-grade ore destined for electric vehicle battery applications; these operations are already under margin pressure from elevated sulfur prices caused by Middle East supply disruptions. In response to the decree's announcement, a major Indonesian stainless steel mill suspended offers, signaling market expectations of higher stainless steel pricing downstream. London Metal Exchange nickel futures rose 2.6% to a one-month high following the announcement, reflecting market recognition of tightened cost floors.
The policy creates a two-tier impact on Indonesia's nickel processing industry, which accounts for over 50% of global output. High-grade ore remains largely insulated due to existing market prices trading well above government benchmarks, but lower-grade material will face material price increases, compressing margins for HPAL and downstream stainless producers already navigating elevated input costs from geopolitical supply constraints.
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