A new report by C4ADS reveals that Chinese companies control a majority of Indonesia's nickel refining capacity, raising concerns about supply chain vulnerability and potential environmental risks. This dominance could impact Indonesia's economic growth and present challenges for US and European automakers in the global EV market.
Chinese firms exert significant control over Indonesia 's nickel refining industry, owning approximately 75% of the nation's 8 million metric ton refining capacity. This dominance has raised concerns about supply chain vulnerability and environmental risks , according to a report by the Washington-based global security nonprofit C4ADS.
The report, released on Tuesday, revealed that while Indonesia's nickel refining capacity was distributed among 33 companies, shareholder overlap ultimately pointed to Chinese companies controlling the majority of smelting operations. This concentration of power, the report argues, could hinder Indonesia's ability to leverage its nickel resources for economic growth and shape the industry according to its own interests.The reliance on Chinese-controlled nickel production also presents a challenge to US and European automakers competing in the global electric vehicle (EV) market. Increasingly restrictive trade policies targeting China exacerbate this disadvantage, as nickel is a crucial component in EV batteries. Last year, an Indonesian official disclosed that Chinese companies were actively engaging with Indonesian and South Korean firms to establish partnerships, aiming to dilute their stakes in smelters and enhance market access for US consumers. President Prabowo Subianto subsequently formed a task force dedicated to developing the domestic downstream mineral industry, prioritizing domestic financing to gradually reduce the perception that foreign entities reap the most benefits.Two Chinese companies, Tsingshan Holding Group and Jiangsu Delong Nickel Industry Co Ltd, emerged as the dominant players, collectively controlling over 70% of Indonesia's refining capacity as of 2023. Both companies were among the earliest investors when Indonesia initiated its push for domestic processing of nickel ore, a strategic move that propelled the nation to its current position as the world's leading nickel producer. However, these companies have also faced scrutiny over workplace safety and environmental concerns. In 2023, a court in Central Sulawesi sentenced two workers at Indonesia Tsingshan Stainless Steel to seven months in prison for negligence that led to a fatal fire at a Tsingshan facility. Earlier that year, two workers were killed in clashes at the PT Gunbuster Nickel Industry smelter in North Morowali, owned by Jiangsu Delong Nickel Industry. Despite these incidents, Tsingshan has been divesting stakes in some of its smelters, including a deal in October 2023 with Indonesian state miner Aneka Tambang for a 30% share in PT Jiu Long Metal Industry.
Nickel Refining Supply Chain Environmental Risks Indonesia China Electric Vehicles
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