PT Weda Bay Nickel (PT WBN) — a joint venture between Tsingshan Group (51.2%) and Eramet (37.8%) — has received an initial 2026 RKAB (Work Plan and Budget) approval of 12Mwmt of nickel ore.

This represents a 71% reduction compared with the quota granted in late 2025 and far below the operator’s 2026 production target of 42Mwmt. The development follows a similar announcement from PT Vale Indonesia which disclosed in January that it had received only 30% of its requested 2026 quota. Both companies plan to apply for a revision of RKABs to a higher volume.

These significant RKAB reductions align with the Indonesian government’s stated intention to lower total nickel ore production in 2026 to 260–270Mwmt (revised upward from the earlier 250-260Mwmt target on 11 February), compared with 379 Mwmt in 2025. According to Tri Winarno, Director General of Minerals and Coal at Indonesia’s Ministry of Energy and Mineral Resources (ESDM), the objective is to support LME nickel prices within a stable US$19,000–20,000/t range.

Following the initial quota-cut announcement on 17 December 2025, LME nickel prices surged from US$14,125/t (16 December 2025) to a peak of US$18,750/t (29 January 2026). Market sentiment — largely driven by expectations of constrained Indonesian supply — has since kept prices elevated around US$17,000/t in February. The confirmation of PT WBN’s reduced quota is likely to reinforce market belief that Indonesia may follow through with a meaningful cut in 2026, particularly given that a similar reduction was discussed at the start of 2025 but ultimately resulted in a higher final quota.

In the short term, this news may provide further support to LME nickel prices. However, several countervailing factors limit the sustainability of the rally. The first is the ongoing electric vehicle battery market structural shift away from nickel-containing NCM in China, accounting for less than 20% of market share in 2025. The other is weak stainless steel demand amid a deteriorating global trade environment. The two segments accounts for over 80% of global nickel demand. As a result, higher nickel prices may face resistance from downstream consumers. Whether prices above US$19,000/t can be absorbed by the market remains uncertain.

Project Blue forecasts a nickel market surplus of 249kt Ni in 2026, compared with 212kt Ni in 2025. While Indonesia’s supply tightening could significantly impact the market in H1 2026, additional RKAB allocations may be granted after July. A sustained ore cut in 2026 exceeding 30% y-o-y appears unlikely, given Indonesia’s economic reliance on the nickel supply chain, the importance of nickel to its downstream EV development strategy and the scale of ongoing MHP capacity build-out.