Nickel Industries Ltd (NIC.AU) saw its shares plummet 5.47% during intraday trading on Thursday, as investors reacted to emerging regulatory concerns in Indonesia.

The sharp decline follows a report from Jefferies highlighting that a potential inclusion of the company's Nickel Pig Iron (NPI) under Indonesia's Domestic Sales Obligation represents a new regulatory overhang. This policy would require the miner to sell a portion of its NPI output domestically, potentially impacting its operations and sales strategy.

While the Indonesian government supports a new HPM ore pricing formula that has increased royalty payments, Jefferies noted the actual price paid for ore remains unchanged. The brokerage maintained its 'hold' rating on the stock with a price target of A$1, citing these regulatory uncertainties as a key concern for investors.