From Mine to Weapon: Can Indonesia Build a World-Class Defense Industry?

Jakarta, CNBC Indonesia – The global military power landscape is no longer determined solely by the number of weapons and personnel. In this era, combat capability depends heavily on material supply chains: copper, nickel, and rare earths underpin military electronics, ammunition, radar, drones, and communication systems. Warfare is no longer just about territory, but about who controls defense technology raw materials. JP Morgan’s report, Pandora’s Bog: The Global Energy Shock of 2026, highlights how conflict intensity can drive demand for mining minerals even in the short term. Recent examples include the use of rare earth minerals in US military operations during the first 96 hours of the Iran conflict that erupted on 28 February 2026. In recent years, defense spending by major nations has continued to rise. The United States, for instance, has allocated a defense budget of $831.5 billion (approximately Rp14.551 trillion at an exchange rate of $1 to Rp17,500), while NATO members are encouraged to allocate up to 5% of GDP to defense spending. This trend confirms that strategic defense materials will remain in high demand amid growing global uncertainty. According to Global Firepower (GFP), Indonesia’s position in the global military power rankings cannot be overlooked. The country ranks 13th out of 145 nations. GFP uses the PwrIndx index, which combines personnel, equipment, resources, financials, and geographical factors to calculate conventional warfare potential (land-sea-air). Under this assessment, military strength is not standalone but linked to logistics and domestic industrial support. In the 2026 GFP report, Indonesia excels in the maritime sector, ranking first in merchant fleet category and among the top for other vessels such as corvettes and offshore patrol vessels. On paper, this indicates Indonesia has a strong maritime logistics base for an archipelagic nation – relevant as logistics is the ‘muscle’ keeping military operations running, especially during large-scale mobilisations in conflict. However, a strong merchant fleet does not automatically ensure robust defense without a solid industrial base. The merchant fleet can be mobilised during conflicts to transport troops, ammunition, vehicles, and logistics. But logistical strength is fragile if strategic components, such as ammunition, rely on imports or vulnerable global supply chains. This is where mining directly connects to defense issues. Despite significant resource potential, Indonesia still faces major challenges, including dependence on imports for certain defense equipment components and weapons. Indonesia’s efforts to achieve defense industry self-sufficiency continue to show progress. Certain defense equipment, including rifles, ammunition, patrol vessels, and tactical vehicles like the Maung and Anoa, are now fully domestically produced. PT Pindad leads light weapon production, from pistols to SS1, SS2, and SS3 assault rifles used by the military and police. Small-calibre ammunition production capacity has significantly increased from 400 million rounds per year in 2020 to a target of 600 million annually. Factory modernisation and new machinery investments support production efficiency and cost reduction. Focus is also placed on producing local spare parts for aircraft, ships, and tanks. However, advanced components such as jet engines and electronic sensors still require imports. The Central Statistics Agency (BPS) recorded weapon imports (including ammunition) in 2025 at a high and sharply rising $467.97 million (approximately Rp8.19 trillion at $1 = Rp17,500), a 160% increase over the past three years. Such dependence makes Indonesia more vulnerable to global supply chain disruptions. In other words, Indonesia has ‘upstream’ resources but lacks ‘downstream’ resilience to ensure strategic material availability during disruptions from geopolitical, logistical, or supplier policy factors. In this regard, mining emerges as the foundation of Indonesia’s modern defense. In the defense sector, copper is one of the most strategic metals. Copper has long been known for its superior properties for military use. Its corrosion resistance, high electrical and thermal conductivity, and malleability make it a vital material in defense. Copper is used in ammunition casings (brass/copper brass), electrical systems and wiring for fighter jets, radar, sonar, and advanced electronic devices. Global facts underscore how integral this material is to modern military equipment – from ammunition requirements to next-generation combat systems. Most crucially, copper is a primary component of fast-moving military goods, meaning demand is high and continuous. High demand for copper in the military industry is reflected in price spikes during conflicts. For instance, the US Department of Defense has increased annual production of 155mm copper-containing shells from 93,000 to 1.2 million units by 2025. Globally, Dubai-based Simon Hunt Strategic Services estimated copper usage for military applications in 2021 reached 2.186 million metric tonnes, nearly 9% of global refined copper production, growing at around 14% annually until 2026. Each F-35 fighter jet is estimated to contain around 1,200 pounds of copper in its wiring, electronics, and armament systems. According to the European Defence Agency (EDA), each ammunition