Indonesia is tightening state control over nickel, the country’s biggest global nickel supply and a key lever in the electric-vehicle battery race, even as the EV market’s chemistry shift threatens to reduce nickel’s payoff. The policy comes after years of betting that controlling nickel would allow Indonesia to build a homegrown EV value chain, a strategy that also expanded mining and smelting amid rising environmental risks, the Associated Press reported Feb. 18.
Indonesia’s tightening follows its 2020 decision to ban raw nickel ore exports under President Joko Widodo, a move that drew a surge of Chinese-backed investment into refining. S&P Global Market Intelligence figures cited by AP show Indonesia’s share of global nickel supply jumped to about 60% in 2024 from 31.5% in 2020. Analysts say the shift helped move more of the world’s nickel processing closer to Indonesia, but it also raised questions about how the industry grew and how it was regulated.
Jakarta had hoped that its control over nickel would underpin a fully domestic EV industry—covering everything from mining and batteries to finished cars. AP reported that experts have said the promise was used to justify forest clearing and mining expansion in the name of the energy transition as climate risks deepened. “The forests have been exploited to the brim,” said Putra Adhiguna of the Jakarta-based Energy Shift Institute, adding, “But you never got the electric-vehicle value chain.”
In 2025, Indonesia expanded enforcement aimed at what it described as illegal exploitation of natural resources. AP said authorities reported seizing more than 4 million hectares (9.8 million acres) of mines, palm oil plantations and processing sites, levying $1.7 billion in fines, and said they could seize another 4.5 million hectares this year. AP also reported that Indonesia said many mining and plantation licenses were tainted by bribery or never properly approved.
The environmental costs of nickel production have also been documented by outside researchers and watchdogs. AP reported that mining drove the loss of about 370,000 hectares of Indonesian forests between 2001 and 2020—more than in any other country—citing analysis by the World Resources Institute. AP said more than a third of that loss was old-growth rainforests that store large amounts of carbon and are important for limiting climate change. It also reported that the heavy use of coal to run Indonesian nickel smelters has slowed parts of the energy transition, with an IEEFA analysis in 2024 finding major nickel producers emitted about 15 million metric tons of greenhouse gases in 2023, largely because of coal reliance.
Several accounts of enforcement and takeover tactics have highlighted tensions inside Indonesia’s nickel sector. AP described a prominent seizure last year in which Indonesian soldiers, accompanied by a local television crew, took control of part of the world’s largest nickel mine. AP said the mine is mostly owned by Tsingshan Holding Group and has been linked to deforestation, air and water pollution, increased coal-fired emissions, and the displacement of communities, along with health risks, according to a 2024 report by the nonprofit group Climate Rights International.
While Indonesia framed its enforcement as targeting illegality, critics said the broader direction was not aimed primarily at improving safeguards. Bhima Yudhistira, with the Jakarta-based Center of Economic and Law Studies (CELIOS), told AP that the move was not aimed at environmental protection or restoring forestry safeguards. “There is no guarantee things will get better,” Yudhistira said, adding they could get “even worse.”
AP also said Indonesia’s industrial strategy has struggled to translate nickel dominance into a large domestic EV manufacturing base. Indonesia’s early battery ambitions saw South Korea’s Hyundai Motor Group and LG Energy Solution open Indonesia’s first EV battery-cell plant in July 2024, with capacity to supply more than 150,000 electric vehicles. But AP reported that LG Energy Solution withdrew in April 2025 from a larger $8.4 billion battery investment, citing market and investment conditions, while BYD continued building an EV plant and CATL, described by AP as the world’s largest EV battery maker, is constructing a battery factory with Indonesian state firms.
At the same time, AP reported that Indonesia’s EV market remains relatively small. The country sold more than 43,000 electric vehicles in 2024, accounting for about 5% of total car sales, according to the Indonesian Business Council, while public charging infrastructure remained limited, with around 1,500 stations nationwide in 2024. Even a hypothetical scenario in which Indonesia produced 1 million EVs a year would use less than 1% of the country’s national nickel output, according to the Energy Shift Institute.
Analysts say the deeper problem is timing: the crackdown and push for nickel-dependent downstream processing may be occurring just as EV makers move toward lithium iron phosphate, or LFP, batteries. AP reported that EV makers are shifting to LFP batteries, which reduce nickel and cobalt use; it said LFP batteries are cheaper, more stable and longer lasting, and are used in nearly half of all EVs, according to the International Energy Agency. That shift, AP said, could leave Indonesia squeezed between the cost of building out nickel-heavy industry and the likelihood that less nickel is needed per vehicle.
Indonesia is also trying to manage pressure from both Washington and Beijing, with critical minerals becoming a focal point in trade negotiations. AP reported that analysts said Indonesia’s nationalization drive could loosen Beijing’s grip on parts of the supply chain and give Jakarta more leverage to court U.S. buyers and investors. AP said one potential concession—within long-running trade negotiations involving the Trump administration—would be lifting the ban on raw nickel exports to the U.S., and noted that Indonesia has invited the U.S. to invest in critical minerals as tariffs are discussed.
“How does Indonesia straddle between the two superpowers who both want to gain control of the national resource that Indonesia has?” said Li Shuo, director of the Asia Society Policy Institute’s China Climate Hub, according to AP. “Make no mistake, it’s going to be very difficult,” he added. Yudhistira, of CELIOS, told AP that land seizures could further destabilize the nickel industry and make investors hesitate over committing new capital to Indonesia-based mining and processing projects, leaving the future of nickel—both mining and downstream processing—“unknown.” “Uncertainty is very costly for investors,” Yudhistira said.