World's largest holder of nickel reserves tightens control over metal

Indonesia is tightening state control over the world’s largest nickel reserves at a time when the United States and China intensify their global competition for critical minerals.

Although global demand is gradually shifting away from heavy reliance on nickel, the move could still send ripples through global electric vehicle (EV) supply chains, according to an article by the Associated Press.

Indonesia has become the dominant force in the nickel market. Its share of global supply surged to around 60% in 2024, up from 31.5% in 2020, according to data from S&P Global Market Intelligence. The sharp increase followed a 2020 export ban on raw nickel ore imposed by former President Joko Widodo, a move that attracted a wave of Chinese-backed investment into domestic refining and smelting.

Jakarta’s strategy was to leverage its nickel dominance to build a fully integrated domestic EV industry — spanning mining, battery production and vehicle assembly.

In 2025, Indonesian authorities launched a sweeping crackdown on what they described as illegal exploitation of natural resources, saying many mining and plantation licenses were linked to bribery or lacked proper approval. Officials say more than 4 million hectares of mines, palm oil plantations and processing sites have been seized, $1.7 billion in fines imposed, and another 4.5 million hectares could be taken over this year.

However, analysts caution that the crackdown comes as nickel’s strategic payoff may be weakening. Many Chinese EV manufacturers are shifting toward battery chemistries that require far less nickel, favoring iron-based technologies instead.

Indonesia’s ambition to transform its nickel reserves into the backbone of a domestic EV industry initially attracted strong interest from foreign investors. In July 2024, Hyundai Motor Group and LG Energy Solution opened the country’s first EV battery-cell plant, with capacity to supply more than 150,000 electric vehicles annually.

But momentum has slowed, as the article recalls that LG Energy Solution withdrew from a planned $8.4 billion battery investment in April 2025, citing market and investment conditions.

Meanwhile, Chinese automaker BYD is continuing construction of an EV plant in Indonesia, and CATL — the world’s largest EV battery producer — is building a battery factory in partnership with Indonesian state firms.

China remains the key player in Indonesia’s nickel sector, using the metal to support both its stainless steel industry and clean energy manufacturing. 

The largest nickel reserves are concentrated on the Indonesian island of Sulawesi, which accounts for more than half of global nickel mine output.

China has sourced nickel from Indonesia for decades, but ties deepened significantly after the 2020 export ban. Imports of nickel matte — a semi-processed material used in battery chemicals and alloys — rose nearly 28-fold between 2020 and 2023, with more than 90% of shipments coming from Indonesia, according to trade data.

Over the same period, North and South America’s combined share of global nickel production fell from 16% to 7%, while Europe’s share dropped from 35% to 10%.

Environmental concerns are also mounting. Indonesia’s nickel smelters rely heavily on coal-fired power, complicating the country’s energy transition. A 2024 analysis by the Institute for Energy Economics and Financial Analysis found that major nickel producers emitted around 15 million tons of greenhouse gases in 2023, largely due to coal use.

By Nazrin Sadigova