Indonesia’s Quest for Nickel Nationalization Still Runs Through China: What It Means for Global EV Supply Chains

by Anamika Anamika August 4, 2026

Indonesia has spent the better part of a decade turning itself into the world’s nickel superpower. Ban the export of raw ore, force companies to process it at home, roll out the red carpet for foreign investment the playbook worked. Indonesia now dominates global nickel production and wants to take the next step: becoming an actual manufacturing hub for EV batteries, not just a mine. There’s just one catch. However loudly Jakarta talks about reclaiming control of its mineral wealth, the truth is a lot messier because right now, the road to nickel independence runs straight through Beijing.

Why everyone suddenly cares about nickel

Nickel is one of those unglamorous minerals that quietly became essential the moment the world got serious about electric cars. It’s a core ingredient in most lithium-ion EV batteries, and demand has only gone one direction as automakers ramp up production. Indonesia happens to sit on something like 40–45% of the planet’s known nickel reserves. That’s an enormous amount of leverage but leverage only matters if you actually control what happens to the resource once it comes out of the ground.

Enter China, checkbook in hand

When Indonesia banned raw nickel exports back in 2020, it forced companies to build processing plants on Indonesian soil instead of just shipping ore overseas. Chinese firms Tsingshan, Huayou Cobalt, CNGR, Zhejiang Huayou, to name a few jumped at the opportunity, pouring billions into smelters and industrial parks across Sulawesi and other mining regions. The policy did exactly what it was designed to do: Indonesia became the world’s biggest producer of refined nickel. But there’s an asterisk. A huge chunk of that processing infrastructure is Chinese-owned or Chinese-operated. Indonesia has the rock in the ground; China has the smelters, the technical know-how, and the capital that turned that rock into something automakers actually want to buy.

So what does “nationalization” even look like here?

Indonesian officials keep floating the idea of pulling more of the industry under state control leaning on state-owned enterprises, building out domestic supply chains, pushing into higher-value work like battery components and, eventually, finished EVs. It’s an understandable ambition. But swapping out foreign capital for homegrown capital isn’t something you do overnight. Smelters cost billions and take years of hard-won expertise to run well, and right now that expertise mostly lives with Chinese companies who’ve already been doing this at scale.

Why the rest of the world is paying attention

This isn’t just an Indonesian story. Automakers in the U.S., Europe, South Korea, and Japan all depend on a steady, affordable flow of battery materials. Any shake-up in Indonesian ownership rules or export policy could ripple straight through to battery costs and supply timelines worldwide. It’s also tangled up in the broader push by Western governments to de-risk their supply chains from Chinese influence. That’s part of why companies from the U.S., Europe, Australia, South Korea, and Japan have been circling Indonesia, looking to strike their own partnerships. But building serious alternatives to what China has already built takes years so for now, China’s grip on the industry isn’t loosening much.

Growth with a price tag

None of this comes without real economic upside for Indonesia: billions in export revenue, new industrial jobs, and a flood of foreign investment. But it’s come with costs too: deforestation, coal-fired smelters driving up emissions, and persistent questions about labor conditions on the ground. Jakarta’s real challenge going forward isn’t just about ownership stakes, it’s figuring out how to keep growing the industry without wrecking the environment or staying dangerously reliant on one country’s money and machinery.