A structural wave of global resource nationalism is underway, driven by the convergence of escalating geopolitical competition and the demands of the green transition. This is prompting small and medium-sized resource-rich nations to systematically restructure control over critical minerals. This trend is not a random occurrence but possesses clear endogenous drivers and historical continuity.
In an environment of heightened geopolitical rivalry and rising trade protectionism, smaller economies face limited policy space. They commonly seek to increase their share of revenue within global supply chains by leveraging core commodities like critical minerals and new energy resources. The rise of resource nationalism has endogenous causes and is expected to persist over the next five to ten years.
While resource nationalism is not a new topic, the current wave exhibits three distinct characteristics compared to historical episodes. First, strategic metals such as lithium, cobalt, nickel, and copper have become the new focal points, shifting the focus from oil to the "battery elements" required for the energy transition. Second, policy tools have become more systematic, evolving from simple export bans to comprehensive systems encompassing export controls, mandatory local processing, equity dilution, and national royalties. Third, policies in one country create demonstration effects; Indonesia's ore export ban has been emulated by Zambia, Zimbabwe, and the Democratic Republic of Congo, while the Lithium Triangle nations in Latin America are also advancing nationalization processes.
Indonesia's pivotal role in this wave stems from its simultaneous dominance over the global supply of four major commodities: nickel, thermal coal, palm oil, and tin. It also significantly influences the alumina and bauxite markets. This highly concentrated supply power is the fundamental source of its policy leverage. The roots of Indonesia's resource nationalism lie in the historical "resource curse" dilemma—possessing abundant mineral resources while long playing the role of a raw material supplier with low retention of industrial value-added. The Suharto era's high openness to foreign investment brought mine development but failed to build sustainable local processing capacity. After President Joko Widodo's administration took office in 2014, it made resource downstreaming a core national policy, formally initiating the first round of systematic resource nationalism.
From a results-oriented perspective, Indonesia has been the most successful executor of resource nationalism globally to date. Following the 2014 raw ore ban, foreign capital was compelled to invest in RKEF blast furnaces and HPAL facilities within Indonesia, with over $10 billion flowing into Sulawesi alone. By 2024, Indonesia's share of global nickel pig iron production surged from less than 5% to over 50%, and its annual stainless steel output exceeded 4 million tons, making it the world's second-largest producer outside China.
From the 2014 raw ore ban to the 2026 DSI revision, Indonesia's resource nationalism has undergone three transitions: from "passive defense" to "active offense," from single commodities to all categories, and from crude control to refined sovereign management. The policy shift in June 2026 marks a new phase of "tactical adjustment within an offensive strategy"—the strategic direction remains unchanged, but important compromises have been made in execution intensity and methods.
The policy evolution can be divided into three stages. The first stage (2014-2019) was marked by the raw ore export ban, with the core goal of attracting foreign smelting capacity into Indonesia, representing a 'passive defensive' policy. The second stage (2020-2024) featured refined policy tools like export tax differentials, the HPM benchmark price mechanism, and the RKAB quota system, entering an 'active management' phase. The third stage (2025-present) is characterized by the DSI single window, the B50 biodiesel mandate, HBA administrative pricing, and significant compression of RKAB quotas. However, a significant revision in June 2026—extending policy from single to all commodities, shifting from crude control to refined sovereign operations, and making key compromises in execution—marks Indonesia's entry into a new cycle of 'systematic offensive (with tactical adjustments)' resource nationalism.
DSI's Establishment and Impact
PT Danantara Sumberdaya Indonesia (DSI) is the state-designated exclusive export entity. It operates the "Single Gateway" system for natural resource exports, with the core objective of centralizing overseas sales of three strategic resources—coal, crude palm oil, and ferroalloys—under state entity control, consolidating "pricing power" from dispersed private miners and plantations to a national platform.
There has been longstanding dissatisfaction within the Indonesian government regarding private exporters "underreporting prices and transferring profits." DSI's design aims to eliminate information asymmetry and profit-transfer opportunities in the private export chain by centralizing export rights. President Prabowo formally announced the establishment of the National Export Administration (DSI) in a parliamentary speech on May 20. Ten days later, Coordinating Minister for Economic Affairs Airlangga Hartarto provided a clear roadmap: initially, DSI controls will focus on three strategic export categories—CPO, thermal coal, and ferroalloys, which contributed $66.13 billion in export value in 2025. Notably, nickel ore exports were fully banned starting in 2020, and the ban remains in effect.
The DSI export policy will be implemented in two phases. The first is a transition period from June 1 to the end of December, during which exporters can still ship normally but must electronically submit all export documents to DSI via the customs service system. Exporters remain responsible for tariffs and related taxes. The government will assess DSI's readiness in the first three months. The second phase is the full implementation period, expected to start no later than January 1, 2027. Exporters will then need to transfer export contracts with foreign buyers to DSI, which will act as the export representative, managing the entire process from transaction to payment. However, Danantara CEO Rosan Roeslani stated on May 21 that DSI's takeover would not affect existing long-term contracts, though the government would reassess contracts deemed "significantly below international market index levels."
Indonesia's Macroeconomic Pressure: The Real Driver for Policy Acceleration
The resource policy shift under the Prabowo administration is rooted in multiple macroeconomic pressures facing Indonesia. Currency depreciation, fiscal gaps, rating downgrades, and capital outflows form the real backdrop for the sharp policy turn. External shocks and internal livelihood pressures are creating a double squeeze, prompting the government to accelerate the use of resource sovereignty cards, leveraging control over key mineral exports to secure fiscal resources and negotiation leverage. When the rupiah depreciates, ratings are under pressure, and fiscal space narrows, domestic political pressure precisely provides ample policy legitimacy for 'extracting resource rents.'
Specifically, Indonesia faces four layers of macro pressure. The first is exchange rate pressure—the rupiah has faced significant depreciation pressure from 2025 to 2026, with accelerating capital outflows raising central bank intervention costs. According to data, the rupiah depreciated from around 15,122 per dollar in October 2024 to around 18,000 by June 2026, a cumulative depreciation exceeding 18%, reaching its weakest level since the Asian financial crisis. The second is fiscal deficit—expansion of social welfare programs like free lunches combined with energy subsidy burdens have sharply narrowed fiscal space, creating an urgent need for new revenue sources. The third is inflation pressure—rice prices in some regions have risen 30% to 50%, forcing the government to adopt a tough stance on resource policy to demonstrate control over resource sovereignty to domestic voters. The fourth is credit rating—warnings from international rating agencies regarding fiscal discipline and external balance are limiting the government's overseas financing capacity, while resource export revenue is the most direct source of foreign exchange.
In February 2026, Moody's gave Indonesia's sovereign rating a negative outlook, citing policy uncertainty, weak governance, and deteriorating tax revenues. On March 4, 2026, Fitch Ratings followed, downgrading Indonesia's sovereign credit outlook from "stable" to "negative" while maintaining its investment-grade rating at BBB. Fitch specifically pointed to increased policy uncertainty and diminished credibility as core reasons, warning that the planned review of the National Fiscal Law could relax the 3% deficit ceiling, severely undermining policy credibility.
DSI's Impact on Three Key Commodities (Coal, Palm Oil, Nickel)
Coal is Indonesia's largest single export commodity by value, with 2025 exports worth approximately $24.48 billion, with China and India as core buyers. After the DSI transition period began, some Chinese coal buyers have already postponed June procurement plans, awaiting clarity on the single-window system's operational details, and other major buyers like India may follow. Coal quality varies greatly, and if DSI reviews prices without clear formulas, buyers will factor in additional policy risk premiums, potentially further depressing purchase prices.
For palm oil, DSI and the B50 biodiesel policy create a dual squeeze effect. B50 absorbs palm oil through domestic demand, while DSI restricts tradable volumes through export channel control. Their combination means Indonesian CPO export availability will face bidirectional pressure from the "demand side" and the "channel side." However, with Malaysia as an alternative supplier, stricter Indonesian export controls may accelerate the shift of palm oil trade flows to Malaysia, weakening policy effectiveness while potentially raising the global edible oil price floor through structural changes in trade flows.
For nickel, DSI's direct impact is relatively minimal because Indonesian nickel product exports are already highly concentrated, with NPI and MHP dominated by a few major companies like Tsingshan, Lygend, and Huayou, making export channels already relatively centralized.
Thermal Coal: Dominant Export Position, Rising Policy Costs
Indonesia's 2025 coal production was approximately 820 million tons, accounting for 8.9% of global output. Annual thermal coal exports are about 400 million tons, representing around 45% of global seaborne trade. Indonesia's coal is primarily low-calorific-value lignite. A core change in 2026 supply stems from a major adjustment to the RKAB policy, with the government lowering the annual production target from 2025's actual output of ~790 million tons to ~600 million tons, a nearly 24% cut. All previously approved 2026 quotas have been voided. The first batch of approvals shows significant production plan cuts for many miners, with some reductions exceeding 50%. Full-year approved quotas may only be in the 600-650 million ton range, indicating significantly tightened supply constraints. Furthermore, the continuation of the Domestic Market Obligation policy, requiring priority supply for domestic power and industrial use, combined with recent steps to centralize export channels under state management, will further limit actual export volume elasticity.
The price spread between low-calorie coal (3400-4100 kcal) and medium-to-high-calorie coal (5300-6322 kcal) is an important leading indicator for gauging domestic coal supply tightness. A widening spread suggests tighter supply for medium-to-high calorie coal, while low-calorie coal may face pressure from price inversions or domestic demand diversion.
Data from 2024-2026 shows the spread between HBA 6322 kcal and 3400 kcal was relatively stable in the second half of 2025. However, since early 2026, with RKAB quota tightening and stronger DMO enforcement, the spread has trended wider. In May 2026, the spread expanded to about $76 per ton, significantly higher than the ~$68 per ton in the same period of 2025, indicating intensifying supply tightness for medium-to-high calorie coal.
Parallel to RKAB is the DMO policy, requiring coal companies to supply 25% of their output to the domestic market at capped prices, primarily to state utility PLN. This ratio may increase to 30% in the future. The actual enforcement intensity of DMO is a key high-frequency indicator for judging Indonesian coal export availability—when PLN inventories are low or domestic electricity price pressure rises, DMO enforcement strengthens, tightening spot supply for the export market.
Indonesia's thermal coal reference price (HBA) for the first half of June 2026 was raised across all four grades. The HBA is becoming a binding administrative floor price benchmark, with export contracts not allowed to fall below a certain percentage of it. DSI will use it for unified pricing. This means Indonesian FOB prices are no longer solely determined by market supply and demand but are embedded with an administrative price floor, systemically raising the global seaborne coal price center.
The ongoing and escalating conflict in the Middle East is injecting additional marginal demand into global thermal coal through the energy substitution channel. The key transmission mechanism is the tightening of LNG supply and sharp price increases, prompting price-sensitive markets in Asia and Europe to accelerate switching from gas to coal. According to analysis from Wood Mackenzie and the IEA, the LNG supply gap caused by the Middle East conflict could add an annualized demand of approximately 20-30 million tons to global (ex-China) thermal coal demand in 2026, with China potentially adding 30-40 million tons, for a global incremental demand of around 60 million tons, providing important support for global coal prices.
Palm Oil: Multiple Drivers from Policy, Weather & Demand, Yet the Reality is Oversupply
On the production side, while Malaysian April output saw a slight year-on-year decline, absolute levels remain high. Indonesian production recovery since April has been stronger. Shipping estimates for May show a month-on-month export decline, indicating weak export growth. In Indonesia, inventories have been accumulating since March, creating selling pressure. The Indonesia-Malaysia refined palm oil price spread weakened significantly in April. Indonesia's new export regulations triggered a sharp drop in domestic CPO prices, causing refined export margins to jump and stimulating exporter sales willingness, with active buying for June-July shipments noted recently.
The Indonesian B50 policy is a key variable affecting medium-term supply and demand. If implemented in the second half of 2026, Indonesia's industrial palm oil consumption would increase from about 14.37 million tons in 2025 to over 16.20 million tons, with a corresponding contraction in exports. However, B50 road testing is not yet complete, and the official document and updated 2026 biodiesel allocation targets have not been released by the Ministry of Energy, creating uncertainty about a July 1 implementation. Regarding the new export rules, during the June-December transition period, export procedures are almost unchanged, and DSI does not charge fees, but the business model post-2027 remains undetermined.
El Niño adds uncertainty to medium-term supply. An NSO monthly outlook report indicates the ocean-atmosphere coupling system reflects the formation of an El Niño event, expected to strengthen and persist through the 2026-27 Northern Hemisphere winter. There is a 63% probability of a super-strong El Niño event occurring between November and January, which would place it among the strongest events since 1950. Historical experience shows a super-strong El Niño can reduce Malaysian palm oil output by 12% year-on-year and yields by 13%, while reducing Indonesian output by 3% and yields by 10%. Under a moderate El Niño scenario, Indonesia's 2026/27 production estimate drops from 46.70 million tons to 46.06 million tons, and to 44.42 million tons under a super-strong scenario, supporting a medium-term bullish view for palm oil.
Nickel: Reconstructing the Cost Curve
Indonesia has turned "legal supply" into a policy-adjustable variable through administrative means, with RKAB quotas as the switch. The overall upward shift of the cost curve, driven by rising sulphur costs, forms the long-term price floor support. The 2026 nickel ore RKAB quota range is 250-270 million wet tons, a reduction of over 30% from the 2025 approved figure of 379 million tons. A key reminder is that quotas do not equal production. 2025 actual production was about 265 million tons, with a capacity utilization rate of around 81%. Therefore, 2026 effective supply depends on the product of 'actual approved volume multiplied by what mines can realistically produce multiplied by whether ore grades continue to decline.'
The increase in Indonesian nickel ore costs comes from two directions. The first is the revision of the HPM benchmark price formula, pushing correction factors and by-product metal pricing towards raising the tax base price. The second, and more disruptive, direction is the sharp rise in sulphur prices. Sulphur is a core consumable for HPAL hydrometallurgical refining, with consumption of about 8-10 tons per ton of MHP. Affected by the Middle East conflict, sulphur prices have surged from around RMB 1,000 per ton in early 2024 to over RMB 9,000 per ton by mid-2026, an increase of nearly ninefold.
The systematic upward shift of Indonesia's nickel cost curve is the most structurally significant change in the current nickel market. When sulphur prices were low, the comprehensive cost of the HPAL route was around $11,000 per ton. With sulphur prices soaring above RMB 9,000 per ton and increased ore costs from HPM benchmark price hikes, the comprehensive HPAL cost has been pushed to around $17,000 per ton.
Downstream nickel demand shows a clear differentiation pattern. The NPI route is tied to the stainless steel chain, highly sensitive to cost pass-through, with thin profit margins. The high-nickel MHP and precursor routes are more closely linked to the demand rhythm of new energy vehicle batteries. Nickel is in a contradictory pattern of "supply surplus + rising cost curve." Short-term supply-demand balances still show a surplus of about 250,000-300,000 tons, but HPM increases and rising sulphur costs have pushed HPAL comprehensive costs from ~$11,000/ton to ~$17,000/ton. Against the backdrop of high-grade nickel surplus, this forms a medium-to-long-term floor support where "prices are unlikely to stay below the cost line for long." Supply-side disturbances could trigger short-covering at any time, but a trend bull market requires effective acceleration on the demand side.
Future Potential Pricing Themes
A key risk lies in trading consensus-driven narratives. Resource nationalism is not a new term and has been initially priced in by the market. Even if a long-term logic is correct, short-term high volatility can destroy trading outcomes. Commodities must price not only supply but also demand. Weak demand has become a new consensus and is unlikely to improve significantly in the short term, constraining commodities from embarking on smooth bull runs. Taking palm oil as an example, negative basis and current good production data make sustaining high spot prices difficult, allowing bearish logic to prevail. When all demand shows K-shaped divergence and incremental growth highly depends on AI industries yet to prove commercial viability, necessary caution is warranted against risks of buying at highs.
There is significant market divergence regarding the actual effectiveness of Indonesian policies like DSI, RKAB, and B50. The issue lies not only in industry unpreparedness but also in potential shortcomings in state import-export and overseas systems. DSI, a newly established entity under the sovereign wealth fund Danantara, has reportedly discussed broad exemption schemes with major exporters and traders; there are also signs of RKAB relaxation. This suggests the price support logic may shift from "administrative supply tightening" to "preventing low-price declarations and dynamic adjustment." The Prabowo administration's policy style is known for "high-profile announcements and discretionary adjustments." Future RKAB quotas are more likely to become dynamically adjustable management tools rather than rigid compression targets, but the risk of "policy flip-flops" cannot be ignored, and the probability of price reversals should not be underestimated.
Indonesia is becoming a model for resource-rich countries in Latin America and Africa. Its new supply-side policies have entered a new cycle: from tax hikes, quota contractions, and crackdowns on illegal mining to controlling the export end. A series of interconnected measures are becoming a new source of fragility in global commodity supply. The frequent emergence of supply disruptions and the overall upward shift of the supply cost curve are systemically raising the price center for commodities. Notably, Indonesia's high dependence on imported raw materials amplifies the transmission of external cost shocks to the domestic industrial chain, making the upward shift in the price center more rigid.
Concluding Remarks
The rise of resource nationalism is, in essence, a policy choice for small and medium-sized resource-rich countries whose policy space has been significantly compressed under the overlapping narratives of "great power competition—supply chain security—green transition." They cannot transfer adjustment costs through currency, technology, or military hegemony like core powers, nor can they maintain a pure free trade stance against the headwinds of "de-globalization." Consequently, leveraging domestic key minerals and new energy carriers through administrative means to increase their share of revenue in the global value chain becomes a seemingly rational, reactive strategy. Its characteristic is an attempt to use sovereign power to rewrite the "resource-processing-trade" distribution order dominated by transnational capital.
However, the effectiveness of this policy concept faces constraints. First is the asymmetry of state capacity: resource nationalism requires a government to possess high industrial policy execution capability, regulatory penetration, and corruption control—areas where most resource-rich countries are deficient. Indonesia's nickel downstreaming has shown results, but lagging infrastructure, frequent environmental compliance disputes, and intense central-local interest conflicts expose the typical "resources but lack governance" dilemma. Second is the arbitrage inertia of vested interests: in economies long dependent on foreign investment and concession systems, entrenched interest networks have formed around resource extraction. Any reform attempting to redistribute rents may encounter "regulatory capture" resistance, where policies are superficially accepted but arbitrage continues through transfer pricing, shell companies, and export underreporting, diluting policy effectiveness. Third is the "negative feedback" mechanism of capital markets: resource nationalism is often accompanied by a sharp rise in policy uncertainty, to which international capital markets are extremely sensitive. Once foreign capital perceives risks of expropriation, contract default, or exchange controls, it may rapidly withdraw or demand higher risk premiums, triggering a negative spiral of sovereign rating downgrades, capital outflows, and currency depreciation.
Furthermore, resource nationalism contains a deep paradox: it seeks to gain bargaining power by "cutting dependence on the old system" but remains highly dependent on that same old system for technology and market channels. Most resource-rich countries lack independent smelting, processing, and end-market capabilities. Their resources only realize value when embedded into global supply chains dominated by Western or Chinese companies. Therefore, the more radical the policy shift, the higher the short-term "realization cost"—declining export revenue, widening fiscal deficits, and exchange rate pressure—ultimately forcing the government to oscillate between "sovereign control" and "capital cooperation adjustment." This oscillation itself further undermines policy credibility, forming a vicious cycle of "policy uncertainty → capital withdrawal → economic pressure → policy rollback → credibility damage." From this perspective, resource nationalism is less a mature strategic choice and more a "policy experiment under compression."
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