Indonesia tightens grip on nickel, reshaping ties with Chinese investors
Stricter quotas, higher taxes, and global competition are forcing recalibration of Beijing's dominant role, analysts say
SINGAPORE (MNTV) — Indonesia’s drive to control its vast nickel resources and capture more of their value is forcing a major shift in its relationship with Chinese investors, who dominate the industry, according to analysts at Singapore’s S. Rajaratnam School of International Studies (RSIS).
Indonesia produced 67 percent of the world’s nickel in 2025, and since banning raw-ore exports in 2020 has pushed to process the metal domestically.
This year it tightened production quotas, raised taxes, and revised its pricing formula, with President Prabowo Subianto saying Indonesia should ultimately set prices; it also created a state body to oversee strategic commodity exports and curb under-invoicing.
The changes weigh heavily on Chinese firms, which run an estimated 75 percent of Indonesia’s processing capacity and depend on specific ore grades and costly, immovable infrastructure that is hard to exit.
Chinese business groups have pushed back: the China Chamber of Commerce in Indonesia warned of over-enforcement disrupting operations, and the Chinese embassy estimated abrupt policy changes could affect about $50 billion in investment and 400,000 jobs.
Indonesia has defended its right to regulate, with Finance Minister Purbaya Yudhi Sadewa saying the minerals belong to Indonesia and that investors unable to accept the rules could go elsewhere.
The industry is also being pulled into global electric-vehicle supply chains, exposing it to Western environmental and traceability standards — a challenge given how much Indonesian processing relies on captive coal power.
Jakarta is broadening partnerships too, through a 2026 U.S. trade deal and closer mineral ties with the EU, South Korea, and Australia.
The RSIS analysts argue Chinese firms will need to integrate more deeply — local procurement, training, cleaner energy — to keep access to those markets, even as Indonesia still needs Chinese capital and expertise.
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