Indonesia has resumed exports of several processed mineral products\nafter a new rare-earth regulation left more than 100 ships stuck at its\nports. Yet Jakarta has not abandoned its wider ban on raw mineral\nexports. Indonesia still wants minerals processed at home, but Chinese\ncompanies now control much of the industry created by that policy.<\/p>\n
Indonesia resumes exports, but not raw ore exports<\/p>\n
The latest disruption began after Indonesia introduced a regulation\nrestricting exports of rare-earth elements and compounds with purity\nlevels below 99 percent.<\/p>\n
Testing then detected traces of rare-earth elements in ordinary\nprocessed products, including alumina, copper cathodes and nickel\nderivatives. Without a clear limit for incidental rare-earth content,\nauthorities delayed export clearances. The Indonesian Nickel Industry\nForum said at least 120 ships had been unable to leave by July 20.<\/p>\n
The government has now allowed those shipments to proceed while it\nrevises the regulation and sets a permitted threshold for trace\nrare-earth content in other processed mineral exports.<\/p>\n
Why Indonesia banned raw mineral exports<\/p>\n
Indonesia still prohibits many raw mineral exports. Its goal is to\nstop foreign buyers from purchasing cheap ore, processing it abroad and\ncapturing most of the value. Companies seeking Indonesian nickel,\nbauxite or copper must generally refine or process it inside the\ncountry.<\/p>\n
Refining minerals at home can create jobs, attract factories and\nraise export revenues. The policy has helped Indonesia build smelters\nand industrial parks while becoming the world\u2019s dominant nickel\nproducer.<\/p>\n
However, much of this expansion has relied on Chinese investment,\ntechnology and processing capacity. That dependence is particularly\nrisky at a time of intensifying trade disputes and geopolitical tensions\ninvolving China, including tensions over Taiwan, which could leave\nIndonesia more exposed to economic pressure or disruptions in regional\nsupply chains.<\/p>\n
How minerals entered the global trade war<\/p>\n
Critical minerals have recently moved closer to the center of global\ntrade tensions.<\/p>\n
In April 2025, Trump imposed worldwide \u201creciprocal\u201d tariffs, arguing\nthat persistent US trade deficits, unequal tariff rates and foreign\ntrade barriers had weakened American manufacturing. Indonesia initially\nfaced a proposed 32 percent tariff before negotiations reduced the rate\nto 19 percent.<\/p>\n
Although the tariffs affected many countries, China remained the main\nstrategic target of Trump\u2019s wider trade agenda. Washington had long\naccused Beijing of state subsidies, technology transfers,\nintellectual-property violations and restrictions on foreign\ncompanies.<\/p>\n
Just two days after Trump announced his reciprocal tariffs on April\n2, 2025, China responded with a package of countermeasures that included\nnew export controls on several medium and heavy rare-earth products. The\nmove brought China\u2019s dominance of critical-mineral supply chains\ndirectly into the escalating trade confrontation. However, Beijing had\nalready begun tightening its control over strategic minerals well before\nTrump\u2019s 2025 tariffs, introducing export controls on gallium and\ngermanium in 2023, followed by restrictions on graphite and\nantimony.<\/p>\n
Those restrictions did not start the trade war, but they turned\naccess to critical minerals into one of its most important\nbattlegrounds.<\/p>\n
Minerals in the US-Indonesia trade agreement<\/p>\n
That helps explain why minerals featured in the US-Indonesia trade\nagreement finalized in February 2026. Washington said Indonesia would\nremove restrictions on exports of industrial commodities, including\ncritical minerals, while both countries would cooperate on supply-chain\nsecurity.<\/p>\n
Indonesian officials have offered a narrower interpretation. They\ninsist that the ban on raw mineral exports remains in place. American\nand other foreign companies may gain access, but they must invest in\nIndonesian processing first.<\/p>\n
This gives Indonesia leverage. Foreign companies need its mineral\nresources, but Jakarta can demand investment, factories and jobs in\nreturn.<\/p>\n
Indonesia controls the minerals, but China dominates the\nprocessing<\/p>\n
Indonesia\u2019s policy has produced real results. More processing now\ntakes place inside the country, and Indonesia has gained a larger role\nin global mineral supply chains.<\/p>\n
The problem is Indonesia\u2019s overdependence on China.<\/p>\n
Chinese companies supplied much of the financing, technology and\nconstruction capacity needed to build smelters quickly. Chinese\ninvestment in Indonesia\u2019s nickel-refining sector reached an estimated\n$30 billion in 2024, while Chinese firms accounted for around 75 percent\nof national refining capacity.<\/p>\n
Indonesia has therefore reduced one form of dependence while creating\nanother. It exports less raw ore, yet much of its processing industry\nnow relies on Chinese capital, technology and markets.<\/p>\n
The risks of overdependence<\/p>\n
That dependence carries a wider strategic risk. Tariffs, export\ncontrols and access to energy, technology and critical minerals are\nincreasingly used as economic and political leverage. China has already\nrestricted exports of strategic materials during disputes with the\nUnited States.<\/p>\n
Heavy reliance on Chinese financing, processing technology and buyers\ncould limit Jakarta\u2019s room for maneuver if relations deteriorate or\nwider geopolitical tensions disrupt trade and supply chains.<\/p>\n
The environmental costs are also serious. Nickel expansion has\nbrought deforestation, polluted water, land disputes and industrial\naccidents. Many smelters rely on coal-fired power plants, weakening\nclaims that Indonesian nickel automatically supports a clean-energy\ntransition. Chinese-backed industrial parks are directly connected to\nmany of these problems.<\/p>\n
The real question is not whether Indonesia should process its own\nminerals. It should. The challenge is ensuring that downstreaming\nproduces Indonesian expertise, ownership and higher-value manufacturing\nrather than simply moving Chinese-controlled processing onto\nIndonesia<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/indonesias-mineral-strategy-brings-processing-home-but-deepens-reliance-on-china-1786269009", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }