Massive investments made by Chinese companies in Indonesia nickel industry may pose a geopolitical threat to the West because Chinese companies is starting to dominate nickel mining in Indonesia.
Indonesia nickel superpower
Nickel is currently Indonesia’s first priority commodity to become a clean-energy superpower. Without nickel from Indonesia, it will be difficult for the world to achieve net zero emissions. Indonesia occupies the top position along with Australia in nickel reserves.
Indonesia currently has the Morowali Industrial Park (IMIP) that houses 40,000 workers on a 3,000 hectares (Ha) wide land for smelting and refining nickel in large quantities. The IMIP production capacity is currently at 280,000 tons per year.
In addition, Indonesia and Australia have nickel reserves of 21 million metric tons each in 2022 compared to world reserves of 100 million metric tons. This means that Indonesia and Australia each contribute 21% of the world’s total nickel reserves.
For Indonesia, this is a good opportunity to become the largest country in nickel mining.
China dominates Indonesian mining
In recent times, China has invested heavily in Indonesia’s nickel industry, dominating various mining processes. This action is a threat to western countries in terms of China’s influence and control over the global nickel reserves.
Meanwhile, America and Europe do not want to depend on China for clean energy. But China dominates various critical mineral and coal sectors for the manufacture of batteries and solar cells.
In Indonesia, many foreign companies cooperate with Chinese companies. For example, Ford and Vale are collaborating with a cobalt mining company, Zhejiang Huayou Cobalt to build a nickel processing plant in Sulawesi; and Posco, a Korean iron mining company, collaborated with an iron mining company, Ningbo Richin, to build a nickel-processing plant.
Chinese domination over nickel in Indonesia
Currently, China has several large projects with fantastic values in Indonesia. According to Minister of Investment Bahlil Lahadalia, China had invested US$ 3 billion in Indonesia in the Q4 2022.
Chinese investment value in Q4 of 2022 is the highest compared to other countries valued at US$ 3 billion such as Singapore with US$ 2.7 billion, Hong Kong with US$ 1.6 billion, Malaysia with US$ 1.1 billion, and the United States with US$ 0.9 billion.
The project includes:
- Shandong Nanshan, a major Chinese company, is expanding its aluminium smelting complex worth US$ 6 billion, which is the largest foreign investment in Indonesia. The company also invites other Chinese companies to come and invest in Indonesia.
- In the IMIP area, China has invested US$ 1.63 billion for the development of area. With Tsingshan Group, Delong Group, and PT Indonesia Morowali Industrial Park signed the cooperation, collaborating to build a carbon steel factory with a capacity of 3.5 million tons with an investment of US$ 980 million.
- Lygend Resources & Technology, the largest nickel company from China used 9.6% of its total IPO valued at US$ 594 million (IDR 9.21 trillion) in Hong Kong for massive expansion in Indonesia in 2021. With PT Trimegah Bangun Persada (TBP) as a business partner in nickel mining and production.
