Indonesia, the world’s largest producer of nickel and exporter of coal, plans to impose export and windfall taxes on both commodities, a move that could increase costs for steelmakers and electric-vehicle battery producers globally. The proposal is currently under discussion between the country's finance and energy ministries.
"The related income will be sufficient to help bridge the subsidy gap," Purbaya Yudhi Sadewa, a minister at the Indonesian Finance Ministry, said in a statement. Sadewa noted that the absence of export duties has created regulatory loopholes that encourage under-reported invoices and smuggling.
The plan follows a World Bank forecast predicting global commodity prices will climb approximately 16 percent in 2026, with coal expected to jump 20 percent and nickel to rise 12 percent. Indonesia's government is seeking to capture a greater share of the revenue from this commodity upswing while also tightening customs controls.
The new taxes represent a significant policy shift that could reverberate across markets dependent on Indonesian supply. For nickel, the primary component in many electric vehicle batteries, the tax could add immediate cost pressures, while the coal tax may affect energy prices in major Asian economies that rely on Indonesian exports.
Nickel Costs to Rise
The implementation of an export tax is expected to grant Indonesia’s customs authority greater power to inspect shipments before they leave the country, a measure aimed at preventing fiscal losses. According to an analysis by SMM, a change in pricing formulas that includes byproducts could increase the benchmark price for 1.6% grade nickel ore by $2.63 per wet metric tonne.
Despite the new tax regime, officials stated the government remains committed to developing its downstream industries, particularly the nickel-based battery sector. This initiative is part of a long-term strategy to move up the value chain, transforming Indonesia from a raw material exporter into a major producer of finished goods like EV batteries. The country's trade surplus expanded to $3.32 billion in March, providing a stable backdrop for the new fiscal measures.
This article is for informational purposes only and does not constitute investment advice.
