Nickel futures in London jumped on Wednesday after the world's biggest nickel mine in Indonesia was forced to drastically reduce output, in an effort to tighten global supply to lift prices of the critical battery metal.

French miner Eramet, which operates Weda Bay Nickel alongside Tsingshan Holding Group, said Indonesian authorities have capped the mine's 2026 production at 12 million tons of nickel ore, a massive reduction from the 42 million ton quota set by Jakarta in 2025.

Here is Eramet's statement from earlier:

Eramet informs the market that its joint-venture PT Weda Bay Nickel ("PT WBN") has received an initial notification from the Indonesian authorities to proceed with the submission of a Work Plan and Budget (RKAB) reflecting an annual production and sales (internal and external) volume of 12 Mwmt (vs an initial RKAB of 32 Mwmt granted for 2025 and revised upward to 42 Mwmt in July 2025).

The immediate market reaction was a 2.8% jump in nickel futures on the London Metal Exchange. Meanwhile, Eramet shares fell about 5%.

Nickel futs boom and bust cycle 

The move by Indonesia comes as it controls 65% of global nickel output and has slashed mining quotas to reverse a two-year price decline that has squeezed higher-cost rivals in places like Australia and New Caledonia.

Miners such as BHP, once one of the world's largest nickel producers, as well as several others, have closed nickel operations due to oversupply conditions. London-listed Anglo American is in the process of offloading nickel operations to MMG Singapore Resources, part of Chinese-controlled MMG.

Eramet said it was "committed to maintaining a constructive and ongoing dialogue with Indonesian authorities, with the objective of securing production levels that are consistent with the long-term sustainability of operations" and that it planned to apply for "a revision of this production quota to a higher volume."

The metal is widely used in both stainless steel and electric-vehicle batteries, but demand, especially from EVs, has softened worldwide. This year, battery makers are pivoting to grid-scale batteries to help offset the EV slowdown (read report).