Jakarta – Indonesia’s move to revoke nickel mining permits in the ecologically sensitive Raja Ampat region is sending tremors through global commodity markets, the EBC Financial Group said in a statement on Wednesday, July 2.
While environmental groups have hailed the decision as a significant win for conservation, traders and investors are now bracing for the broader impact on nickel prices and Indonesia’s export-driven economy. The world’s top nickel producer, Indonesia, supplied over 50% of the global refined nickel output in 2024.
“For traders and investors, this is a wake-up call that commodity markets — especially in critical sectors like nickel — can be highly sensitive to environmental policy pressures,” said David Barrett, CEO of EBC Financial Group (UK) Ltd.
The government’s decision affects four mining operations inside the UNESCO-protected marine biodiversity hotspot, though one large project continues just outside the restricted zone. Legal challenges from mining firms are already underway, adding further uncertainty to the sector.
While Raja Ampat itself is not a central production hub, EBC notes that the shutdown signals a broader regulatory pivot in Indonesia, which could unsettle supply forecasts and investor sentiment.
Nickel prices, which had slumped below USD 15,000/ton earlier this year due to oversupply and U.S. tariff concerns, have since rebounded to around USD 16,700/ton. But EBC warns that volatility may return if legal battles escalate or further restrictions are announced.
Barret said that nickel’s rebound may mask deeper volatility risks, adding that reduced output could strain Indonesia’s trade surplus and pressure the rupiah, potentially triggering shifts in monetary policy.
Nickel remains vital to global industries — from EV batteries to stainless steel, which still accounts for over two-thirds of global demand. Any disruption to Indonesian supply, EBC concludes, could ripple across industrial sectors worldwide and fuel broader inflationary pressures.
As ESG scrutiny of nickel sourcing intensifies, EBC urges traders to monitor political developments alongside market fundamentals closely.
Nickel mining triggers social, environmental crisis
Indonesia’s nickel industry is under fire as experts warn of mounting social and environmental damage caused by unchecked mining and smelting practices. From severe water pollution to high emissions and frequent labour accidents, the sector’s growth is raising alarms about sustainability and human rights.
Al Ayubi, a policy strategist at CERAH, on Tuesday, described the situation as a “time bomb,” urging the government to make environmental, social, and governance (ESG) standards legally binding, not voluntary. He highlighted that Indonesian smelters emit up to 58.6 tonnes of CO₂ per tonne of nickel, five times higher than facilities like BHP Nickel West in Australia.
Communities are already suffering, he said. On Wawonii Island in Southeast Sulawesi, residents report polluted water sources due to nearby mining, while 93 workplace accidents have occurred in the sector from 2015 to 2023.
Ayubi called for fiscal and licensing incentives to be tied to ESG performance, including the use of clean energy, protection of indigenous rights, and land rehabilitation.
Patricia Rinwigati of the University of Indonesia’s Djokosoetono Research Centre echoed the need for ESG regulation, stating that legal standards must integrate both national and international frameworks. She emphasised the importance of due diligence and accountability.
Andre Barahamin of the Initiative for Responsible Mining Assurance (IRMA) emphasised the importance of upholding Free, Prior, and Informed Consent (FPIC) — the right of indigenous communities to reject mining projects on their traditional lands. He warned that ESG should not be treated as a mere branding tool, but rather as a critical means to prevent conflict and long-term environmental harm.
As global markets increasingly demand the responsible sourcing of critical minerals, experts agree that without immediate legal reform, Indonesia risks long-term damage and lost credibility in the transition to a green economy. (Hartatik/nsh)
Banner photo: Nickel mining in South Sulawesi (Putu Artana/shutterstock.com)
