China Impacted By Indonesia Nickel Drama

Chinese companies that helped build Indonesia's nickel industry into the world's dominant producer are looking as far afield as Africa for longer-term alternatives as rising policy pressure tests the ​investment model that reshaped global supply. Chinese companies helped develop the smelters and industrial parks that turned Indonesia into the centre of global growth for nickel, after Jakarta banned ore exports in 2020.

·      Indonesia's share of production surged to more than 60% of global mined nickel output in 2025, up from just over 30% in 2020, according to U.S. Geological Survey data. The low-cost Chinese-backed output pushed the nickel market into ​surplus, lowered prices and forced higher-cost producers elsewhere to close or suspend operations or seek buyers.

·      But since taking office in late 2024, Indonesian President Prabowo Subianto has focused on ​raising state revenue and spending, including a $20 billion free meal plan. In late May, he outlined plans to bring exports of coal, palm oil and ferro-alloys under centralised state control. ⁠Nickel pig iron, the main nickel product by volume for Chinese producers, was later said to be excluded, but the proposal added to investor concerns over policy stability.

·      Even before that plan, tighter nickel ore mining quotas, proposed tax hikes and ​a sharp upward revision to Indonesia’s benchmark mineral price had unsettled investors and led the China Chamber of Commerce in Indonesia to write a strongly worded letter to Prabowo warning the measures could deter future investment.

·      Foreign direct investment into Indonesia fell 6% in 2025, compared with 19% growth a year earlier. Investment in mining peaked in 2024, while new investment into base metals refining has also plateaued since then.

·      Tsingshan, the world's biggest stainless steel producer, has submitted a proposal worth several billion dollars to ​build an industrial park covering a wide range of minerals including nickel to Madagascar's government, the country's mines ministry told Reuters.

·      Lygend, ⁠which helped pioneer high-pressure acid leach processing to produce raw materials for nickel-rich batteries in Indonesia, is also looking abroad. Lygend is reportedly in talks to buy a stake in the undeveloped Kabanga nickel project in Tanzania from U.S.-listed Lifezone Metals (LZM.N).

·      Greenfield developments ​in Madagascar and Tanzania would bring a different level of risk and lack Indonesia's combination of scale, infrastructure and ore access. This is good news for Western nickel producers who have been doing it tough in recent years.