China and Indonesia have strengthened their economic relationship through several business agreements valued at $10 billion, announced during the Indonesia-China Business Forum held in Beijing. This forum followed high-level discussions between Chinese President Xi Jinping and Indonesian President Prabowo Subianto, who emphasized plans for strategic growth across various sectors, including food, clean technology, and, significantly, nickel mining.
“We must give an example,” President Subianto remarked, stating, “that in this modern age, collaboration — not confrontation — is the way for peace and prosperity.” The joint statement from this meeting underscored intentions to expand collaboration within sectors such as new energy vehicles, lithium batteries, and the digital economy. Such efforts aim to facilitate the global energy transition, stabilize supply chains, and secure mineral resources.
Indonesia's nickel industry, one of the core topics of discussion, is witnessing fresh investments fueled by China's increasing demand for battery-grade nickel, which is pivotal for the production of electric vehicles (EVs). Recently, GEM Co., Ltd., one of China's leading battery materials producers, announced it would invest $1.42 billion to build a high-pressure acid leaching (HPAL) plant with Indonesia's PT Vale. This plant, located in Central Sulawesi, is expected to play a key role in stabilizing nickel supply, particularly as the demand for component materials skyrockets.
Chinese giants like Tsingshan Holding Group and Zhejiang Huayou Cobalt are making significant strides within Indonesia's nickel sector. Recent reports indicate Zhejiang Huayou Cobalt is seeking $2.7 billion to fund its own battery-nickel plant, backed by Ford Motor Co. This setting of ambitious financing goals signals confidence not only in current market conditions but also in Indonesia’s role as a supplier of raw materials pivotal for green technologies.
The Pomalaa plant, another high-profile project being developed by Huayou, is on track to produce 120,000 tons of battery-grade nickel annually, which places it among Indonesia's largest HPAL operations. Both countries view this as inviting timing amid the prevailing slump seen within the nickel market. Despite softness attributed to waning demand for stainless steel and subdued growth in the EV sector, Indonesia remains committed to its long-term strategic goals.
Interestingly, Indonesia emerged as the world's leading nickel producer, sourcing more than half of global production in 2023. The country's efficient output and relatively cost-effective mining practices have sparked shifts across global nickel markets, providing it with substantial influence.
Despite facing challenging market conditions—with prices of nickel dipping—projected growth remains optimistic. According to S&P Global Commodity Insights, Indonesia's mined nickel output is expected to reach 2.1 million metric tons by 2024, reinforcing its lead with more than double its production capabilities from 2020.
Plans for growth, particularly strengthened by Indonesia’s broad cooperation with China, transcend purely resource-related deals. Recently, GoTo Gojek Tokopedia, one of Indonesia’s dominant technology firms, secured agreements with major Chinese players like Tencent and Alibaba to improve the digital infrastructure of the archipelago.
These initiatives are aimed at enhancing local digital talent and development—an area Indonesia sees as both necessary and worthwhile for advancing its economy. Subianto's administration appears determined to use technological investment as leverages to improve the nation’s standing on the world stage as it navigates its digital future alongside traditional industries.
Beyond tech partnerships, both countries are also collaborating on travel and trade agreements aimed at improving bilateral exchanges, including fresh agricultural exports like coconuts. These developments signal growing interdependencies forged by mutual benefits, rather than mere economic transactions.
On the geopolitical front, Indonesia's stance within the South China Sea has emerged as sensitive, particularly after recent joint statements with China. Indonesia has staunchly maintained its position against recognizing the “nine-dash line” claims attributed to Beijing. This was underscored by the Indonesian Foreign Ministry’s insistence on its sovereignty over the North Natuna Sea—showing careful navigation between cooperation and independence.
During Prabowo’s visit to Beijing, he underscored intentions to bolster maritime safety and develop fisheries, reflecting Indonesia’s cautious pairing of cooperation with maintaining sovereignty. While Chinese investments burgeon, concerns persist among local officials about excessive reliance on China, especially concerning security interests related to contested waters.
Former diplomat Eddy Pratomo offered caution, warning against unilateral actions driven by current agreements. He expressed fears such concessions might complicate Indonesia’s legal standing concerning maritime claims, emphasizing the need for balance between friendship and independent sovereignty.
This precarious dance between partnership and autonomy is being echoed by members of Indonesia's parliament, who are emphasizing the importance of building domestic maritime capabilities—an assertion rooted in both national pride and necessity.
With significant economic opportunities on the horizon, the Indonesian government’s engagement with China is fraught with both peril and promise. If managed strategically, the burgeoning ties could bolster Indonesia’s economic growth and global standing, albeit with careful consideration of its long-term sovereignty and strategic interests.
