Indonesian coal magnate Andi Syamsuddin Arsyad, known as Haji Isam, is considering buying part or all of French miner Eramet's 38.7% stake in PT Weda Bay Nickel, the giant Halmahera mine that was the world's largest nickel mine before Jakarta cut its output quota this year, Bloomberg News reported on Wednesday.

The report sent Eramet shares up as much as 9.8% in Paris, their largest intraday gain since June 12. Eramet may seek a valuation of as much as $4 billion for the whole mine, a person familiar with the matter told Bloomberg, although other people gave a lower figure. The people said talks were still at the consideration stage and no final decision had been made.

For investors in Asia, a sale would shift a large slice of Indonesia's flagship nickel asset from European to Indonesian hands at a time when the government is using production quotas to support prices. It would also be the second big deal for Haji Isam this year, after he agreed in September to acquire a stake in coal producer PT Bayan Resources.

Eramet looks to sell down Weda Bay Nickel

Eramet has been looking for cash. The Paris-listed company announced plans in February to raise funds through a capital increase and asset sales to cut debt, according to Bloomberg. Last month the French government said it would become Eramet's largest shareholder.

The stock had fallen 33% this year before Wednesday's jump, leaving Eramet with a market value of about 1.1 billion euros ($1.2 billion), Bloomberg reported. That is small next to the valuation Eramet is said to be seeking for Weda Bay as a whole.

Eramet said it had received expressions of interest for a significant part of its Weda Bay stake, and for a minority stake in its Centenario lithium plant in Argentina, according to Bloomberg. It has also agreed to sell undeveloped mining concessions in Argentina's Arizaro salar for $71 million.

Haji Isam is not the only Indonesian name in the frame. Danantara, the country's sovereign wealth fund, is another possible buyer, Bloomberg and Mining.com.au reported. Weda Bay's other shareholders are China's Tsingshan Holding Group and state miner PT Aneka Tambang, or Antam, which is listed in Jakarta. Mining.com.au put Antam's holding at 10%.

Quota cut halted Weda Bay this year

The mine's recent history explains both the seller's mood and the buyer's opportunity. Before the cuts, Weda Bay was producing 42 million tons of ore, according to Bloomberg. The government cut its production quota earlier this year, which halted operations, before restoring it in a mid-year revision. Mining.com.au put the mine's output at around 30,000 tons of nickel a year.

That episode showed how much power the annual quota process, known as the RKAB, gives Jakarta over mine economics. And the pressure on supply is not over. Energy and Mineral Resources Minister Bahlil Lahadalia blamed Indonesian output for weak prices last week, saying nickel had fallen to about $15,800 a ton, the Indonesia Business Post reported. He said ore should be left in the ground when prices are poor.

Officials have signaled that 2027 quotas could be cut more deeply than this year's. The revised 2026 quota is about 295 million to 300 million wet tons, according to the Indonesia Business Post, citing data provider SMM. Capital Times has reported on the ministry's plans for lower 2027 nickel quotas. Nickel prices are down about 3% so far this year, according to Bloomberg.

What a sale would mean for Indonesian investors

A local buyer could have an edge in a market where licences, quotas and export rules are set by the state. For Danantara, a stake would add to the state's existing exposure through Antam. Antam, which has its own nickel ore and ferronickel business, has not said whether it would seek a larger holding.

For Haji Isam, a nickel stake would extend a coal-based business into the metal at the center of Indonesia's downstream processing push. The government wants processing to move beyond intermediate products toward finished goods, the Indonesia Business Post reported, which means mine ownership increasingly comes with pressure to invest further down the chain.

Price is the open question. A $4 billion valuation for the whole mine would put Eramet's 38.7% stake at roughly $1.5 billion, more than Eramet's own market value, before any discount for quota risk or the weak nickel market. Other people familiar with the matter gave more conservative numbers, according to Bloomberg, and neither the size of any stake on offer nor a timetable has been disclosed.

The next markers are the 2027 quota allocation from the energy ministry and any update from Eramet on the sale process. Until then, Weda Bay's value will depend as much on how many tons Jakarta allows it to mine as on what bidders are willing to pay.