Dec 6 (Reuters) - Indonesia's output of nickel products in 2023 is expected to reach 1.65-1.75 million metric tons, a government official said on Wednesday.

Indonesia is the world's top producer of nickel ore and products, which come in forms such as nickel pig iron (NPI) that is used to make stainless steel or mixed hydroxide precipitate (MHP), a feed material for electric vehicle batteries.

Indonesia's primary nickel production rose 32% to 1.16 million tons last year, accounting for 38% of the world's output and more than double the country's 16% share in 2019, data from the International Nickel Study Group showed.

Total production capacity of nickel products this year is estimated at 2.2 million metric tons, said Septian Hario Seto, a deputy minister in Indonesia's Coordinating Ministry for Maritime Affairs and Investment.

Production capacity for NPI and nickel matte is seen at 1.94 million tons, and MHP capacity is estimated at 265,000 tons, data from Septian's presentation slides at the Fastmarkets China Battery Raw Materials Conference in Shanghai showed.

"We have huge capacity. We don't need to expand further," he said, adding that smelters that do not have their own mines are going to face difficulties amid tightening ore supply and declining ore grade.

Septian said the government is not issuing new permits at the moment for NPI, but it is still encouraging the expansion of high pressure acid leach (HPAL) projects that make MHP.

The NPI smelters currently under construction this year were approved in 2022, Septian said. (Reporting by Siyi Liu in Shanghai, Mai Nguyen in Hanoi and Bernadette Christina in Jakarta; Editing by Jacqueline Wong and Varun H K)