The Indonesian government is conducting a comprehensive evaluation regarding the termination of permits for the RKEF smelters which make products in the form of ferronickel and nickel pig iron, a mining ministry official said on Tuesday.

The world's biggest nickel producer is experiencing a rapid depletion of ore after a surge in downstream investment, prompting the government to seek ways to reserve stocks for higher value added products such as the nickel chemicals used in making batteries for electric vehicles.

Irwandy Arif, a senior official with the Energy and Mineral Resources Ministry, said the government is focused on the development of High Pressure Acid Leach (HPAL) smelters - which extract nickel and cobalt from laterite ore bodies to produce Mixed Hydroxide Precipitate, a precursor material for the battery industry - and smelters that produce nickel matte.

It is unclear whether the possible termination will apply to existing permits.

Reserves of ore graded above 1.5% are expected to last until 2029 assuming there is no further exploration, Irwandy told participants at an industry conference organised by the Shanghai Metal Market.

Once a major exporter of nickel ore, Indonesia banned shipments of unprocessed nickel in 2020 to attract investment onshore.

The Indonesia Nickel Miners Association (APNI) has also urged the government to impose a moratorium on new pyrometallurgy plants to extend the lifetime of high-grade reserves.

Indonesia's high-grade 1.7% nickel ore is used mainly to produce nickel pig iron, a feedstock for stainless steel, with EV batteries using lower grade nickel.