According to a research by the Washington-based global security charity C4ADS, Chinese companies own over 75% of Indonesia's nickel refining capacity, which raises concerns about supply chain management and environmental hazards.


According to the analysis, 33 businesses owned Indonesia's 8 million metric tonnes of refining capacity; however, ownership tracing revealed shareholder overlap, and as of 2023, almost three-quarters of the smelting capacity was controlled by Chinese companies.


"As Indonesia aims to use the nickel industry for economic growth, this substantial foreign influence could limit its ability to control and shape the industry for its benefit," according to the assessment, which was released on Tuesday.

According to the paper, the dependence on Chinese-controlled nickel production also puts American and European automakers at a competitive disadvantage in the global EV market as trade restrictions against China become more stringent. One essential component of batteries is nickel.

The mining ministry in Indonesia did not immediately respond.

Last year, an Indonesian official stated that Chinese corporations were contacting South Korean and Indonesian companies about possible collaborations to lower their ownership of smelters and increase the marketability of their product in the United States.

In order to "gradually reduce perception that foreigners got the most benefits," Mining Minister Bahlil Lahadalia said last month that President Prabowo Subianto had established a task force to boost the downstream mineral industry with indigenous financing.

As of 2023, Tsingshan Holding Group and Jiangsu Delong Nickel Industry Co Ltd, two Chinese corporations, controlled over 70% of Indonesia's refining capacity, according to the C4ADS analysis.

The two were among the first investors to support Indonesia's drive to process nickel ore domestically, which has made it the world's largest producer.

Two employees of Indonesia Tsingshan Stainless Steel were given a seven-month jail sentence by a Central Sulawesi court last year for their recklessness, which resulted in a fire and fatalities at a Tsingshan facility in December 2023. Conflicts at Jiangsu Delong Nickel Industry's PT Gunbuster Nickel Industry smelter in North Morowali in early 2023 claimed the lives of two employees.


Requests for response from Jiangsu Delong's joint venture Obsidian Stainless Steel and Tsingshan's company Eternal Tsingshan were not immediately answered. Jiangsu Delong was not available for comment at this time.

In October, Indonesian state miner Aneka Tambang (JK:ANTM) agreed to purchase 30% of PT Jiu Long Metal Industry from Tsingshan, which has been selling shares in some of its smelters.