Chinese Firms Control 75% of Indonesia’s Nickel Refining Capacity, Raising Supply Chain Concerns
Chinese companies now control approximately 75% of Indonesia’s nickel refining capacity, according to a report by Washington-based global security nonprofit C4ADS. The report highlights concerns over supply chain dominance and environmental risks associated with this foreign influence.
Indonesia’s total nickel refining capacity stands at 8 million metric tons, spread across 33 companies. However, ownership tracing revealed significant shareholder overlap, leading to the conclusion that Chinese firms control about three-quarters of the smelting capacity as of 2023.
“As Indonesia aims to use the nickel industry for economic growth, this substantial foreign influence could limit its ability to control and shape the industry for its benefit,” the C4ADS report stated. The dominance of Chinese-controlled nickel production poses challenges for U.S. and European automakers, who face a competitive disadvantage in the global electric vehicle (EV) market amid tightening trade restrictions with China.
Indonesia’s mining ministry has not commented on the report. However, an Indonesian official noted last year that Chinese companies were seeking partnerships with Indonesian and South Korean firms to reduce their stakes in smelters and make products more accessible to the U.S. market.
In response to these concerns, President Prabowo Subianto has formed a task force to develop Indonesia’s downstream mineral industry with domestic financing. “The aim is to gradually reduce the perception that foreigners are reaping the most benefits,” said Mining Minister Bahlil Lahadalia.
The report identified Tsingshan Holding Group and Jiangsu Delong Nickel Industry Co Ltd as controlling more than 70% of Indonesia’s refining capacity. Both companies were early investors in Indonesia’s initiative to process nickel ore domestically, a strategy that has made the country the world’s leading nickel producer.
The industry has faced safety issues as well. In December 2023, a court in Central Sulawesi sentenced two workers at Indonesia Tsingshan Stainless Steel to seven months in jail for negligence that led to a fatal fire at a Tsingshan facility. Earlier in 2023, two workers were killed during clashes at the PT Gunbuster Nickel Industry smelter in North Morowali, owned by Jiangsu Delong Nickel Industry.
Tsingshan’s subsidiary, Eternal Tsingshan, and Jiangsu Delong’s joint venture, Obsidian Stainless Steel, did not respond to requests for comment. Tsingshan has begun reducing its stakes in some smelters, including a deal in October 2023 with Indonesian state miner Aneka Tambang for a 30% stake in PT Jiu Long Metal Industry.
