Indonesian Metals Sector "Nickel: Structural earnings growth intact, des..."

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Indonesian Metals Sector "Nickel: Structural earnings growth intact, des..."

Global Research

18 May 2026ab

Indonesian Metals Sector Equities

IndonesiaNickel: Structural earnings growth intact, despite

volatile nickel policies Mining & Metals

Igor Putra

Analyst

igor.putra@ubs.com

A net earnings upgrade despite policy noises, echoing structural growth to stay +62-21-2554 7033

We believe investors remain on the sidelines as volatile Indonesian nickel policies have Ivan Reynaldo Sutheja

created uncertainty about the impact on nickel earnings. Our sensitivity analysis implies Analyst

a net 2026E NPAT upgrade for our nickel universe from several scenarios of the policy ivan-reynaldo.sutheja@ubs.com

impacts, such as the new higher nickel ore price benchmark (HPM), royalty hike plan, a +62-21-2554 7037

likely export levy and ongoing cost-sharing between miners and smelters. Key swing Daniel Major

factors for our scenarios are the overhangs such as the quantum of the export levy, a Analyst

windfall tax and the profit-sharing scheme. We expect the nickel sector to maintain daniel.major@ubs.com

robust 91%/33% NPAT growth YoY in 2026/27E, led by a solid project pipeline, a low- +44-20-7568 3472

cost integrated supply chain, rising cost curves and regulatory-led tight nickel supply. We Timothy Handerson

think the policy risk may be alleviated by potentially policy reversals, likely led by growing Analyst

net losses in the nickel supply chain. Our top Buy picks in order are INCO and ANTM. timothy.handerson@ubs.com

+62-21-2554 5000

Evidence of growing supply chain losses to support elevated nickel price floor Dim Ariyasinghe

Rising net loss risk in the nickel supply chain is led by tight nickel supply and rising cost Analyst

curves, lifting the nickel price floor.