Behind the US$65 Billion Investment, Indonesia's Nickel Industry Faces Environmental Spotlight
REPUBLIKA.CO.ID, JAKARTA – China’s surge in investments in the global critical minerals sector has driven the growth of Indonesia’s nickel industry and strengthened Indonesia’s position as a hub for nickel production and the electric vehicle battery supply chain. However, in addition to generating economic benefits, the massive growth of the nickel industry in the country also raises serious environmental impacts.
The latest report from Climate Energy Finance (CEF) titled “China locks-in global dominance of critical minerals and metals with US$120 billion outbound investment surge” notes that China’s large-scale investments in mining, smelting, and refining nickel in Indonesia have reached more than US$65 billion since the implementation of the downstreaming policy.
This figure is more than half of China’s total global investments to secure supplies of critical minerals for the energy transition, amounting to US$120 billion since 2023 to date. Countries in the Global South, including Indonesia, have become the focus of China’s latest investments.
“In many Global South countries, Chinese companies are not only focused on extraction but also promote the development of domestic processing industries and value addition. They invest capital in supporting infrastructure, create skilled jobs, and facilitate technology transfers in return for long-term access to strategic commodity supply chains,” said CEF Net Zero Transformation Analyst Matt Pollar in his statement on Tuesday (19/3/2026).
The massive Chinese investment in the nickel processing industry is inseparable from the policy of banning raw nickel ore exports that began during the administration of President Susilo Bambang Yudhoyono in 2014. The combination of that policy and aggressive Chinese investments has propelled Indonesia to become the world’s largest nickel producer, holding 22 percent of the world’s nickel reserves.
Several Chinese companies such as Tsingshan Holding Group Co, Contemporary Amperex Co Ltd (CATL), and Zhejiang Huayou Cobalt have become key players in the expansion of Indonesia’s nickel industry. CEF reveals that the Indonesia Morowali Industrial Park (IMIP) in Central Sulawesi and the Weda Bay Industrial Park (IWIP) in Halmahera are manifestations of these Chinese investments.
These zones, which integrate the entire nickel industry chain, provide substantial economic benefits, such as high export values from nickel derivative products, job creation, and opportunities to become a manufacturing hub for electric vehicles in Southeast Asia.