In Depth: How Indonesia Cornered the Nickel Market — and Itself
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When Septian Hario Seto returned to Jakarta after a two-week trip to the United States late last year, one subject seemed unavoidable. He had been invited four or five times to closed-door discussions on critical minerals and their geopolitical significance, said Seto, a member of Indonesia’s National Economic Council, recalling the trip in a late-November interview. Critical minerals, he said, had become “an extremely hot topic.”
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- Indonesia leveraged its 43% share of global nickel reserves to attract billions in foreign investment and become a leading EV battery materials hub, accounting for 60% of global primary nickel output by 2024.
- Oversupply from rapid expansion caused nickel prices to fall from $30,000/ton in early 2023 to $15,000/ton by late 2025; Jakarta imposed quotas and raised royalties but effectiveness remains uncertain.
- Shifting technology and policy instability have made investors cautious; battery makers’ increasing preference for LFP batteries threatens long-term nickel demand.
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Who’s Who
- Zhejiang Huayou Cobalt Company Ltd.
- Zhejiang Huayou Cobalt Company Ltd. is a Chinese company that has invested billions of dollars in Indonesian smelters and battery projects since 2021. They are also involved in high-pressure acid leach projects designed to produce battery-grade nickel intermediates, with six such projects, backed by companies including Huayou Cobalt, scheduled to begin production in 2026.
- Contemporary Amperex Technology Co. Ltd. (CATL)
- Contemporary Amperex Technology Co. Ltd. (CATL), a Chinese company, has invested billions in Indonesian smelters and battery projects. They are involved in a nearly $6 billion integrated nickel and battery project in Indonesia, which broke ground in July. CATL is also targeting 2027 for small-scale vehicle deployment of solid-state batteries.
- Lygend Resources & Technology Co. Ltd.
- Lygend Resources & Technology Co. Ltd. is a Chinese company that, along with others such as Zhejiang Huayou Cobalt Company Ltd., CATL, and GEM, has invested billions in Indonesian smelters and battery projects since 2021. These investments are part of China's significant capital contributions, bringing technology and skilled labor to Indonesia's nickel industry.
- GEM
- GEM, a Chinese company, has invested billions of dollars in Indonesian smelters and battery projects since 2021. This investment is part of a larger trend of Chinese capital and technology driving the expansion of Indonesia's nickel-related industries.
- BYD Co. Ltd.
- BYD Co. Ltd., a Chinese automaker, is investing significantly in Indonesia. The company is constructing a $1.3 billion electric vehicle (EV) factory in the country, with an anticipated annual production capacity of 150,000 vehicles. This facility is slated to commence production in 2026, marking BYD's strategic move into Indonesia's burgeoning EV market.
- Guangzhou Automobile Group Co. Ltd.
- Guangzhou Automobile Group Co. Ltd. (GAC Group), a Chinese automaker, is expanding its operations in Indonesia. This move aligns with Indonesia's strategy to develop an integrated electric vehicle (EV) supply chain, attracting foreign investors like GAC to establish or expand vehicle assembly plants.
- VinFast Auto Ltd.
- VinFast Auto Ltd., a Vietnamese automaker, is developing an EV manufacturing plant in Indonesia. This move aligns with Indonesia's strategy to become a cornerstone of the global EV supply chain, attracting foreign investors to build battery and EV plants directly within the country.
- Vale S.A.
- Vale S.A., a mining company, is launching a high-pressure acid leach project in 2026. This project is expected to bring nearly 490,000 tons of annual capacity online, focusing on battery-grade nickel intermediates.
- Tsingshan Holding Group Co. Ltd.
- Tsingshan Holding Group Co. Ltd. is a Chinese company. It is involved in producing battery-grade nickel intermediates, with a high-pressure acid leach project scheduled to start in 2026. This project contributes to the rapid expansion of nickel production in Indonesia.
- China Securities Co. Ltd.
- Liu Jiaqi, an analyst at China Securities Co. Ltd., observed that Indonesia's actual nickel production quotas have not consistently aligned with its official plans. For instance, in 2025, the government approved a significantly higher quota than initially set, contributing to market oversupply.
- Zhong Lun Law Firm
- **Zhong Lun Law Firm** Xia Lei, a partner at Zhong Lun Law Firm, highlighted the challenges foreign companies face in Indonesia. These include frequent policy changes, requirements to gradually divest stakes to Indonesian government entities or local companies, and multi-layered licensing procedures involving central and provincial authorities.
- LG Energy Solution Ltd.
- LG Energy Solution Ltd., a South Korean consortium, scrapped its planned $8.45 billion battery manufacturing plant in Indonesia. The decision was attributed to "market conditions and the investment climate" in the region.
- BASF SE
- Germany's BASF SE, alongside France's Eramet SA, abandoned a planned $2.6 billion nickel-cobalt refinery in Indonesia. This decision came amid tightening policies and volatile nickel markets, which have made foreign investors more cautious. High environmental standards in Indonesia, pushing up costs, also contributed to the project's abandonment, especially as nickel prices dropped.
- Eramet SA
- France's Eramet SA, along with Germany's BASF SE, abandoned a $2.6 billion nickel-cobalt refinery project in Indonesia. This decision highlights a growing caution among foreign investors due to Indonesia's tightening policies and volatile nickel markets, which have introduced uncertainty and increased costs, particularly for projects with high environmental standards.
- Tesla Inc.
- Tesla Inc., a U.S. automaker, has not yet committed to a major investment in Indonesia despite years of high-profile talks. This comes as foreign companies face challenges in Indonesia's nickel industry due to volatile markets and tightening policies.
- Antaike
- Xu Aidong, chief expert at the metals consultancy Antaike, commented that some foreign companies have suspended their Indonesian nickel projects. This is often due to high environmental standards that increase costs, making projects difficult to justify when nickel prices are low.
- Zijin Mining Group Co. Ltd.
- Zijin Mining Group Co. Ltd. is mentioned as having an independent director, Bo Shaochuan. Shaochuan notes that while early investments in Indonesia's nickel sector were trend-driven, companies now need to exercise greater caution. This suggests Zijin Mining, like other entities, is navigating the complexities and uncertainties of the Indonesian nickel market.
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What Happened When
- Since 2009：
- Indonesia began restricting raw nickel ore exports.
- 2017：
- There was a brief relaxation of Indonesia's ore export restrictions.
- 2020：
- Indonesia reinstated a comprehensive export ban on raw nickel ore, which remains in force.
- Since 2021：
- Chinese companies have invested billions of dollars in Indonesian smelters and battery projects.
- As of 2024：
- Indonesia accounted for roughly 43% of global nickel reserves and about 60% of global primary nickel output. It also produced about 80% of global nickel intermediate products.
- In 2024：
- BASF SE and Eramet SA abandoned a $2.6 billion nickel-cobalt refinery project in Indonesia.
- Early 2023：
- Nickel prices on the London Metal Exchange were around $30,000 per ton.
- By second quarter of 2024：
- Indonesia began exporting battery cell and pack products.
- Early 2025：
- Indonesia began exporting anode materials.
- April 2025：
- A consortium led by LG Energy Solution Ltd. scrapped a planned $8.45 billion battery manufacturing plant in Indonesia.
- July 2025：
- A nearly $6 billion integrated nickel and battery project involving CATL officially broke ground.
- By September 2025：
- Indonesia had exported $27.2 billion worth of nickel-related materials and downstream products.
- First 10 months of 2025：
- Indonesian cathode nickel exports surged nearly 80% year-on-year.
- First 11 months of 2025：
- Nickel-based ternary batteries made up just 18.8% of the Chinese EV battery market; LFP batteries accounted for over 80%.
- In 2025：
- Indonesian government raised royalty rates on nickel ore, tightened quota approvals, and imposed penalties for illegal mining.
- 2025 (initial quota)：
- Indonesia initially set a quota of 298 million tons, but ultimately approved 379 million tons.
- Late 2025：
- Septian Hario Seto returned to Jakarta from a two-week trip to the United States, having attended several closed-door discussions on critical minerals.
- Late 2025：
- Nickel prices on the London Metal Exchange fell to about $15,000 per ton.
- October 2025：
- Meidy Katrin Lengkey warned that nickel oversupply could push prices as low as $12,000 per ton.
- November 2025：
- LME nickel stocks reached a four-year high of about 255,000 tons.
- December 2025：
- Indonesia announced a planned nickel ore production quota of about 250 million tons for 2026, a 34% cut from 2025.
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