In the global pursuit of the green energy transition, Indonesia has transformed itself from a passive resource provider into a commanding pillar in the global EV supply chain. Through a series of bold reforms- most notably its nickel export bans and industrial policies- Jakarta has cultivated a model of economic nationalism aligned with sustainability ambitions. But the strategy comes with significant tradeoffs; Environmental degradation, community displacement, and growing depconcludeency on foreign capital inflows. Indonesia now faces a critical internal question: can it institutionalize its nickel boom without sacrificing ecological integrity or geopolitical indepconcludeence?
Resource Control as Industrial Strategy
Indonesia’s strategic pivot launched with a 2014 ban on raw nickel ore exports, which were subsequently followed by renewed bans in 2020 and 2022- all of which were aimed at forcing domestic processing. Today, the policy has served its intconcludeed purpose- in 2024, Indonesia produced over 60% of the global supply of refined nickel, which saw export revenues jump from approximately $3 billion in 2020 to around $40 billion in 2024. Natural mineral resources have been securitized as Indonesian national strategic assets-designed not merely for extraction but as instruments of industrial leverage and a firm sovereign identity.
Industrial Expansion and Foreign Investments
Indonesia now hosts nearly 60 nickel smelters across various hubs, Between smelters currently in operation, awaiting permits, and those in construction, there are a total of 190 nickel smelting projects within Indonesia, according to the Indonesian Minisattempt of Energy and Mineral Resources (ESDM). While much of the processing infrastructure has been funded by Chinese investors, Jakarta has reframed necessary financing partnerships within its broader strategy of economic nationalism and resource protectionism. Recent policy shifts indicate that Indonesia is now actively seeking to rebalance foreign involvement, particularly by reducing China’s overwhelming share in the sector. This major pivot away from Beijing-backed investments came as a response to Biden’s Inflation Reduction Act- aimed at curbing Chinese influence in the international EV indusattempt. Indonesia sought to qualify their nickel exports for U.S. green tax credits. However, this shift was much more than regulatory, it was deeply strategic. By adapting to U.S. standards, Jakarta positions itself as a viable supplier in Western EV supply chains, increasing access to diverse markets.
This recalibration grants Indonesia greater control over the terms of foreign engagement. Rather than allowing any singular foreign investor to dictate the rules, Indonesia is applying protectionist tools, export bans and selective alignments. The result of these measures is a much more autonomous, state-led approach that leverages global competition to secure better deals and to limit strategic vulnerabilities. In a sector long defined by external depconcludeencies on great powers providing funding, Indonesia is rewriting the rules- on its terms.
Sustainability Paradox
Beneath the surface of Jakarta’s nickel boom lies a growing paradox. While the sector is key to enabling the global energy transition, much of Indonesia’s nickel processing is powered by coal. Estimates display that nickel smelters emit approximately 45 tons of CO2 per ton of nickel produced. This staggering figure challenges the very sustainability ethos that is the backbone of the EV revolution.
Environmental degradation is not merely a side effect- it is central to the contemporary extraction model. In regions like Southeastern Sulawesi and Papua’s Raja Ampat, nickel mining has led to widespread deforestation, coral reef destruction, and coastal pollution. Over 75,000 hectares of forest have been cleared, damaging fragile ecosystems and marine habitats. These impacts have triggered severe backlash, to the extent that President Prabowo Subianto recently revoked four mining licenses in response to these environmental concerns.
At the community level, displacement, deteriorating public health, and uneven revenue distribution have fueled discontent. Calls for inclusive benefit-sharing, stronger environmental oversight, and equitable labor standards for workers are growing louder each year. As Indonesia ascconcludes into an international resource power, it must ensure that its citizens reap the long-term benefits of mineral wealth.
Strategic Leverage & Geopolitical Risk
Indonesia’s dominance in the nickel supply chain has greatly enhanced its global leverage, but also exposed new strategic risks. While Jakarta seeks to diversify partnerships, many smelters and battery facilities remain heavily depconcludeent on Chinese capital and technology. This leaves the sector vulnerable to Beijing’s political influence, particularly as U.S.-China competition increases across critical mineral sectors. Already, China’s dominance in Indonesian nickel has disrupted regional markets. Competitors like Australia, who once led in global nickel production, have struggled to maintain competitiveness amid a flood of Chinese-backed supply in Southeast Asia.
Western governments are launchning to respond. The United States, the EU and Japan have all implemented measures for greater scrutiny over supply chain transparency, pushing for responsible sourcing, environmental disclosures, and regulatory compliance. These pressures are not adversarial- they are opportunities. They give Indonesia the chance to align with high-standard purchaseers, unlock less strangling investment capital flows and further disengage from singular strategic depconcludeencies.
Building a Holistic and Sovereign Framework
To sustain momentum, Indonesia must refine its model- transitioning from raw industrial acceleration to a more sustainable, growth focutilized development model. This means embedding environmental, social and governance (ESG) principles into the core of its nickel industrial strategy.
Global efforts like the EU’s Critical Raw Minerals Act and multilateral ESG initiatives offer Jakarta the chance to lead by example. At the domestic level state-owned enterprises such as the Indonesia Battery Corporation are spearheading Indonesia’s efforts to localize value chains, combining oversight from the public with private partnerships to ensure alignment with ESG. By institutionalizing such practices, Indonesia can future-proof its nickel sector- not just against environmental criticism, but also against geopolitical volatility and investor risk aversion.
Conclusion: The Future of Indonesia’s Nickel-as-Strategy
Indonesia’s nickel policies are no accident or coincidence- they are a series of deliberate, assertive responses to both the global energy transition and long-standing inequities in the resource trade. Through export bans, industrial mandates, and careful diplomacy, Jakarta has elevated nickel from commodity to statecraft.
But the harder tinquire is now underway: converting this leverage into lasting impact. In order to truly lead, Indonesia must balance growth with ecological resilience, regulatory transparency, and sovereign control over capital flows. If it succeeds, Jakarta will not only be a giant in the nickel production indusattempt, it will be the blueprint for how emerging economies can shape 21st-century supply chains on their own terms.
Indonesia’s nickel nationalism is no longer solely about economics. It is a test of whether a resource-rich, developing state can command global influence-without undermining the sustainability and sovereignty it seeks to uphold.
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