Indonesia’s newly installed Prabowo administration accelerated efforts to control strategic commodities this year, establishing state-run entities like Danantara to oversee resource exports and combat tax evasion. This aggressive resource nationalism fundamentally alters the investment climate that fueled the country’s recent mining boom.
Chinese investors, who built Indonesia’s nickel processing infrastructure, are actively scouting long-term alternative projects in Madagascar and New Caledonia. These companies are protesting strict new mining regulations, proposed tax hikes, and a sharp upward revision to the benchmark mineral price.
The supply reduction is directly enforced by the government’s 2026 RKAB mining quota mechanism. The policy slashed the annual nickel ore allocation from 375 million wet metric tonnes in 2025 down to 270 million tonnes. Combined with Government Regulation (PP) No. 28/2025, the quota restricts new intermediate smelter projects. The China Chamber of Commerce in Indonesia delivered a formal letter of complaint to President Prabowo regarding the quotas. The chamber warned that companies face “excessively stringent regulation, over-enforcement” by local authorities.
Major Chinese processors are now reviewing investments in the African mining sector to hedge against the policy volatility. Tsingshan Group submitted a multi-billion dollar proposal to Madagascar’s government to develop an industrial park modeled on its Morowali operations. This capital flight directly follows President Prabowo Subianto’s hostile takeover of commodity exports and the formation of Danantara. The new state-owned enterprise controls global export supply chains, forcing investors to look elsewhere.
How the 2026 RKAB Quotas Reshape the Global Supply Chain
This regulatory squeeze is a structural pivot from the 2020 export ban. While the 2020 policy successfully forced foreign capital to build smelters inside Indonesia—pushing the country’s share of global mined nickel output from 30% to over 60% by 2025—the 2026 constraints are pushing that capital out. Processors are pivoting to unproven African greenfield developments. Lygend Resources is currently negotiating to acquire a stake in the undeveloped Kabanga nickel project in Tanzania, a site that requires nearly $1 billion in initial development costs. Indonesia’s strategy to capture more domestic value through the Danantara enterprise is directly accelerating the funding of competing nickel hubs in Madagascar and Tanzania.