Indonesia has recalibrated the formula that prices its nickel ore, and the revision shows a valuation method maturing in public

A formula revised twice in five months

On 11 September 2026 the Ministry of Energy and Mineral Resources signed Keputusan Menteri ESDM No. 363.K/MB.01/MEM.B/2026. It took effect on 15 September. The decree is the second amendment this year to Kepmen ESDM No. 268.K/MB.01/MEM.B/2025, the instrument that sets out how Indonesia calculates the Harga Patokan Mineral, the benchmark price applied to nickel ore at the point of domestic sale.

The benchmark is not a market quotation. It is a calculated figure, and the state sets the calculation. Every tonne of ore sold domestically is valued against it, and royalty and non-tax state revenue are assessed on that value. Changing the formula changes the price of the resource as the state understands it. That makes each revision a valuation decision rather than an administrative one.

The first amendment of 2026, issued in April, rebuilt the method substantially. It moved the corrective factor base from 20 percent at 1.9 percent nickel content to 30 percent at 1.6 percent. It brought accompanying minerals into the calculation for the first time. It shifted the unit of account from dry metric tonnes to wet metric tonnes with an explicit moisture content adjustment. The September decree leaves that architecture standing and recalibrates the coefficients inside it, with the adjustment concentrated almost entirely on low grade limonite.

What the revised coefficients say

Ore with nickel content at or below 1.2 percent now carries a corrective factor of 14 percent, falling by one percentage point for every 0.1 percent reduction in nickel content. Ore above that threshold is untouched. Its corrective factor remains 30 percent at a 1.6 percent grade, moving by one percentage point for each 0.1 percent of grade. The cobalt coefficient splits along the same line, 30 percent where nickel exceeds 1.2 percent and 17 percent at or below it, applied where cobalt content reaches 0.05 percent. Iron stays at 30 percent, calculated where iron content is 35 percent or less. Chromium stays at 10 percent.

The formula itself is unchanged in shape. Benchmark price equals the nickel component, plus an iron component, plus a cobalt component, plus a chromium component, with the sum adjusted for moisture content. Each component multiplies the assayed grade by its corrective factor and by the relevant reference metal price. Indonesia is, in effect, running a four mineral valuation on every shipment of what used to be treated as a single commodity.

The result along the grade ladder is steep at the bottom and mild above it. For 1.2 percent ore the benchmark falls to US$24.89 per wet metric tonne. For 1.3 percent it is US$49.20, for 1.4 percent US$53.83, for 1.5 percent US$58.50, and for 1.6 percent US$63.38. Shanghai Metals Market records a delivered market price of US$27.00 per wet metric tonne for 1.2 percent ore, which places the revised benchmark just below the transacted price rather than above it.

Sources differ on the precise starting point, and the discrepancy is worth stating plainly. The Shanghai Metals Market analysis puts the April benchmark for 1.2 percent ore at US$46.06 per wet metric tonne against a pre-April figure of US$17.33. The same firm's flash note gives US$44.97 immediately before the September change. Royalty estimates diverge in the same way, moving from US$6.39 to US$3.48 per wet metric tonne in one account and from US$3.78 to US$3.48 in the other. The direction is identical in both readings. The magnitude is not yet settled.

A benchmark price is a valuation instrument

It is easy to read this as a pricing story. It is more usefully read as a methodology story. Indonesia has built, published, and now twice refined a formula that converts the physical and chemical properties of a natural resource into a monetary value carrying legal and fiscal weight. That is exactly what economic valuation does.

The April revision was ambitious. It recognised that limonite carries cobalt, iron and chromium that had never been priced, and it priced them. Tura Consulting calculated at the time that the change lifted the benchmark for typical 1.2 percent limonite by roughly 91 percent and for 1.5 percent saprolite by roughly 32 percent, compressing processor margins by an estimated 45 percent for high pressure acid leach operations and 34 percent for rotary kiln electric furnace lines. The Ministry's stated intent was consistent throughout. Tri Winarno, Director General of Minerals and Coal, framed the exercise as a technical one with a fiscal purpose.

The formula was reset on the basis of an in-depth evaluation, with the principal objective of optimising state revenue.

He also described the aim as allowing domestic ore to reflect its fundamental value so that it competes with ore from the Philippines and New Caledonia. The September recalibration abandons neither objective. Shanghai Metals Market describes it as a partial rollback rather than a full restoration, with the structural revaluation intact and the coefficients tuned. A method that can be tuned in response to observed market behaviour, five months after its own introduction, is a method in working order.

The Asosiasi Penambang Nikel Indonesia has made a similar point from the industry side. Secretary General Meidy Katrin Lengkey argued that the revision should be judged on total national benefit rather than on price per tonne alone, naming total state revenue, the continuity of mining operations, supply certainty for processors, and the optimisation of Indonesia's nickel value as the measures that matter. The association has asked for a post-implementation fiscal impact evaluation and for the electronic non-tax revenue system to be integrated with the revised formula. Both requests treat valuation as an ongoing practice rather than a one time ruling.

The revenue picture behind the recalibration

The fiscal backdrop gives the ministry room to fine tune. Nickel non-tax state revenue reached Rp21 trillion in the eight months to 31 August 2026, against Rp10 trillion in the same period of 2025. Total mineral and coal non-tax revenue reached Rp108 trillion over the same period. Those gains arrived while nickel ore production fell. Output to 1 September 2026 stood at 173.79 million tonnes, against 320.37 million tonnes for the whole of 2025.

Revenue doubling while volume falls is the clearest available evidence that valuation method, rather than extraction volume, has become the primary lever on what Indonesia earns from its minerals. Tri Winarno put the same conclusion more directly, observing that careful management without pushing production to its limit produces a positive result.

What carries across to environmental valuation

Indonesia now has a functioning, published, iteratively improved method for valuing what comes out of the ground. The corresponding method for valuing what the ground itself provides, and what mining changes about it, is less developed in practice even though the legal basis already exists. Permen LH No. 7 Tahun 2014 sets out how ecological damage, environmental economic loss, and recovery cost are to be calculated. Ecosystem services from water regulation, soil retention, carbon storage, biodiversity and fisheries are measurable. Satellite and drone remote sensing now makes land cover change measurable at parcel scale and at reasonable cost.

Indonesia has shown it can iterate a valuation formula in public until the numbers track reality. The same discipline applied to ecosystem condition would give operators and regulators a shared basis for measuring environmental performance.

The parallel is close. A benchmark price formula and an ecological valuation both take physical measurements, apply agreed coefficients, and produce a monetary figure that carries consequences. The nickel formula has an assay. An ecosystem valuation has a baseline. The nickel formula has corrective factors set by decree. An ecosystem valuation has unit values set by regulation. What the mineral side now has, and the environmental side largely lacks, is the routine of measurement, publication, comparison against observed reality, and adjustment.

Sirkularium's view

For government, the September decree is a useful precedent beyond the nickel beat. It demonstrates that a valuation methodology can be issued, tested against market evidence, and corrected inside a single fiscal year without losing authority. That is the model worth extending to environmental economic valuation, where the methodology exists in regulation but the evidence base is still assembled case by case, usually after a dispute has already begun.

For operators, the lesson is about timing. Companies holding current assay data, moisture readings and by-product content when the April formula landed could model their exposure immediately. Companies without that data spent the following months estimating. The same asymmetry applies on the environmental side, and with higher stakes. An operator with a verified baseline of land cover, water quality, soil condition and biodiversity across its concession can quantify its environmental position and defend it. An operator without one is reconstructing history under pressure.

Sirkularium's recommendation to mining clients is unchanged by this decree and reinforced by it. Commission rigorous, independently verified economic valuation of concession condition as ongoing practice, combining remote sensing with ground truth data and applying the standard methodology Indonesia has already codified. Do it on a regular cycle, not in response to a finding. The nickel benchmark shows what happens when a valuation method is maintained over time. It improves, it earns trust, and the figures it produces are accepted by the parties they bind.

What to watch next: whether the Ministry publishes the post-implementation fiscal review the industry has requested, whether the electronic non-tax revenue system is updated to the revised coefficients, and whether the next benchmark price period confirms that 1.2 percent ore settles close to the US$27.00 delivered level that prompted the adjustment.