China has proposed expanding cooperation with Indonesia to enhance the value added to the country’s mineral commodities and bolster its manufacturing sector, in a move that could deepen Chinese access to Indonesia’s mineral resources, which the government restricts from export in raw form.
Wang Lutong, China’s ambassador to Jakarta, indicated that closer integration of supply chains and industrial activities between the two nations could support their mutual development goals. Speaking last Monday, Wang highlighted the potential synergy between Indonesia’s agenda to develop downstream mineral processing and China’s manufacturing expertise. This strategy aligns with Indonesia’s long-standing policy of banning the export of unprocessed minerals, such as nickel and copper, to promote domestic refinement and stimulate economic growth.
Indonesia holds the world’s largest reserves of nickel, a critical material for stainless steel production and electric vehicle batteries. The country has prohibited raw copper exports since 2014 and introduced a similar ban on unprocessed nickel exports, aiming to encourage investment in local smelting and processing industries.
Experts note that Chinese companies stand to benefit from these restrictions by investing in Indonesian mineral processing facilities. Jayant Menon, a visiting senior fellow at the ISEAS-Yusof Ishak Institute in Singapore, said that such investment would allow Chinese firms to capitalize on Indonesia’s domestic market and broader supply chains while enjoying the ability to export some processed goods. Before Indonesia implemented the nickel export ban, it accounted for roughly half of China’s nickel ore imports. The National Bureau of Asian Research, a U.S.-based think tank, reported that Chinese firms faced significant costs when the ban took effect.
Over the past decade, Chinese investors have injected more than $65 billion into Indonesian industrial estates, smelters, and processing plants focused on electric vehicle battery materials. This investment has not only provided Beijing with access to vital minerals without direct shipment to China but has also transferred technology that supports Indonesia’s capacity for onshore processing, according to researchers from Singapore.
As the United States works to curtail China’s influence in global supply chains, Indonesia’s mineral sector has gained strategic importance for Beijing. Menon noted that Indonesia is likely to welcome increased Chinese investment as part of this dynamic. In line with shifting international trade relations, last year Indonesia and the U.S. issued a joint statement indicating that Indonesia would ease export restrictions on “critical” minerals destined for the United States.
The Chinese ambassador also mentioned potential growth areas for bilateral cooperation in electric vehicles, battery materials, and steel processing industries—sectors heavily reliant on mineral inputs. These developments suggest a continued deepening of economic ties between Indonesia and China centered around mineral resource development and industrial integration.