Chinese Investors Eye Africa, Testing Indonesia's Nickel Dominance
Chinese companies that played a major role in making Indonesia the world’s largest nickel producer are beginning to look for long-term investment alternatives abroad. A number of key nickel industry players that have developed smelters and industrial estates in Indonesia are now exploring new projects in Africa and the Pacific amid mounting concerns over changes in government policy.
The move marks a potential shift in the investment strategy of major global nickel players, which in recent years have made Indonesia the centre of expansion for producing crucial metals for the stainless steel and electric vehicle battery industries, Reuters reported in Jakarta on Friday.
Tsingshan Group, the world’s largest stainless steel producer, is considering building a large-scale mining industrial zone in Madagascar. Meanwhile, Lygend Resources is reportedly exploring the Kabanga nickel project in Tanzania as well as the opportunity to revive the Koniambo mine in New Caledonia.
Both firms are part of the wave of Chinese investment that drove the transformation of Indonesia’s nickel industry after the government banned nickel ore exports in 2020. That downstreaming policy successfully attracted massive investment in the construction of smelters and processing facilities, turning Indonesia into a global nickel production hub.
Data from the United States Geological Survey shows Indonesia’s share of global mined nickel production rose to more than 60 percent in 2025, up sharply from around 30 percent in 2020. The explosion of low-cost nickel production backed by Chinese investors resulted in a global supply surplus and depressed nickel prices. That condition forced several major global producers such as Glencore, BHP, and Sumitomo to close, temporarily suspend, or seek buyers for their higher-cost assets.
However, since President Prabowo Subianto took office in late 2024, the government’s economic policy direction has placed greater emphasis on increasing state revenue to support various spending programmes, including a free nutritious meal scheme estimated to be worth USD20 billion.
At the end of May, President Prabowo floated a plan to place exports of strategic commodities such as coal, palm oil, and ferroalloys under centralised state control. Although the government later clarified that nickel pig iron, the main nickel product produced by Chinese firms in Indonesia, was not included in the scheme, the proposal still raised concerns about the stability of investment policy.
Even before that proposal emerged, investors had already been confronted with tighter nickel ore mining quotas, planned tax increases, and a significant jump in Indonesia’s mineral reference price. These various policies prompted the Indonesian Chinese Chamber of Commerce to send a letter to President Prabowo warning that such measures could potentially hinder new investment.
Canaccord mining analyst Tim Hoff in Perth assessed that increasing bureaucracy and government intervention in commodity trading mechanisms could influence corporate investment decisions. The greater the government control over the commodity sector, he noted, the greater the impact on the scale of investment that investors are willing to commit.
Data shows foreign direct investment into Indonesia slumped 6 percent in 2025 after previously growing 19 percent the year before. Investment in the mining sector peaked in 2024, whilst new investment in the base metal refining sector has tended to stagnate since then.
In Madagascar, Tsingshan has submitted an investment proposal worth billions of US dollars to the local government to build an integrated industrial zone encompassing the development of various minerals, including nickel. Madagascar’s mining ministry stated that the project concept was inspired by the Morowali and Weda Bay industrial estates the firm successfully developed in Indonesia.
Mining Minister Karl Andriamparany said the proposal was still under evaluation and that no mining permits had been issued to date. Tsingshan is known to have signed a memorandum of understanding on cooperation with the Madagascan government in February.
Meanwhile, Lygend Resources is reportedly in discussions to acquire a partial stake in the Kabanga nickel project in Tanzania from Wall Street-listed firm Lifezone Metals. The project is one of the world’s largest undeveloped nickel sulphide reserves.
Beyond Africa, Lygend has also submitted an offer to New Caledonia’s state-owned mining company SMSP to acquire shares in the currently non-operational Koniambo project. The interest arose after company representatives conducted a site visit late last year.
If realised, the investments in Madagascar, Tanzania, and New Caledonia would be the first nickel-sector expansion outside Indonesia for both Chinese firms. Nonetheless, analysts judge that these alternatives will not easily replace Indonesia’s advantages. Besides holding large ore reserves, Indonesia offers a combination of infrastructure, raw material access, and industrial scale that many other countries cannot yet match.
Madagascar still faces political challenges after being under a transition government following last year’s coup. The country has also just lifted a moratorium on new mining permits that had been in place for 16 years. Meanwhile, the Ambatovy project, the country’s sole nickel and cobalt operation, remains a benchmark.