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Australian Prime Minister Anthony Albanese with Indonesian President Prabowo Subianto at a press conference in Jakarta on 15 May 2025. Credit: BAY ISMOYO\/AFP via Getty Images.<\/p>\n
A mere day after swearing in his cabinet on 14 May, freshly re-elected Australian Prime Minister Anthony Albanese boarded a flight from Canberra to Jakarta, signifying to the world the importance his government places in the relationship with its northerly neighbours.\u00a0<\/p>\n
Waiting to greet Albanese for the first overseas visit of his second term was Indonesian President Prabowo Subianto. While there was undoubtedly much to discuss during their Indonesia-Australia Annual Leaders\u2019 Meeting, Albanese and Subianto quickly turned to critical minerals, according to a joint communique<\/a>, with frequent talk of \u201cgreen infrastructure\u201d and \u201cclean energy projects\u201d. \u00a0<\/p>\n \n\t\t\t\t\t\tCombine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.\n\t\t\t\t\t<\/p>\n The overarching trade-off underpinning the two nations\u2019 arrangement is clear. Through the Australia-Indonesia Climate and Infrastructure Partnership<\/a>, Jakarta secures supplies of lithium for its electric vehicle (EV) battery production amid a push to go green, while Canberra expands its market share for exports of its abundant critical minerals. \u00a0<\/p>\n However, signs across the past six months have indicated that Australia\u2019s interest transcends an increase in lithium exports.\u00a0\u00a0<\/p>\n Albanese\u2019s broader vision is for Australia to rival China\u2019s supply chain control as the world\u2019s \u201ccritical mineral monolith\u201d <\/a>. \u00a0<\/p>\n Beijing is a top producer of 30 of the 50 minerals labelled as \u201ccritical\u201d by the US Geological Survey<\/a> and oversees large swathes of international licensing, refining and processing. After US President Donald Trump initiated a trade war with China, Beijing restricted exports<\/a> to the US of various minerals vital for smartphones, EV batteries and infrared missiles. \u00a0<\/p>\n Since the squeeze in supply to western nations, Australia has tried to position itself as a global producer of critical minerals, with some of the world\u2019s largest deposits. \u00a0<\/p>\n Challenges to investing in nickel\u00a0<\/p>\n Paramount to Australia jostling for pole position as a critical minerals producer is nickel, which Indonesia has in abundance. \u00a0<\/p>\n Home to two of the world\u2019s five largest reserves of the metal, Sorowako and Weda Bay, the country is the world\u2019s biggest producer of nickel, with 42.3% of global reserves. Australian mining companies have long eyed Indonesia\u2019s nickel reserves, supported by the government\u2019s desire to increase Canberra\u2019s involvement in the global supply chain of the critical mineral used for EVs and stainless steel. \u00a0<\/p>\n However, Chinese companies own approximately 40% of the production of mined nickel in Indonesia. They are also the shareholders of 75<\/a> of Indonesia\u2019s 357 nickel mining, recycling and processing projects, according to China-Global South Project data. \u00a0<\/p>\n Still, Indonesia has nickel to spare. \u00a0<\/p>\n In 2022, it produced more than 1,400 tonnes (t) of nickel<\/a>, according to industry insight from Mining Technology\u2018s parent company GlobalData. Two years later, President Subianto\u2019s down-streaming and resource nationalism drove an increase to nearly 2,000t, continuing the global nickel surplus expected to last<\/a> until 2027\u201328.\u00a0\u00a0<\/p>\n However, such high production also collapsed nickel prices, which averaged $16,234 per million tonnes during the third quarter of 2024, down a considerable 20.4% compared to the same period in 2023, reveals another GlobalData report<\/a>.\u00a0<\/p>\n In July this year, the Indonesian mining ministry announced plans to reduce the validity term for nickel mining quotas (otherwise known as RKABs), from three years to one, despite having initially extended the term from one to three to better control supply and support prices of nickel, coal and other commodities in 2023. \u00a0<\/p>\n The decision was met with dismay by the Association of Indonesian Nickel Miners, which said the reduction would create unnecessary delays<\/a> as thousands of miners would have to seek new quotas each year. \u00a0\u00a0<\/p>\n Analysts have pinpointed the price collapse, and subsequent unprofitability of the metal, as the primary reason for the closure or divestment of mines in Australia and New Caledonia, allowing Indonesia to grow its global share of production.\u00a0\u00a0<\/p>\n \u201cIndonesia\u2019s share of global mined nickel has surged from 16% in 2017 to over half of total production by 2024,\u201d Gracelin Baskaran, director of the Critical Minerals Security Programme at the Center for Strategic and International Studies, tells Mining Technology. \u201cThis rapid growth has created a global nickel surplus, driven not only by Indonesia\u2019s rising output but also by its ability to undercut competitors, pushing many Western producers out of business and consolidating its dominance in the global nickel market.\u00a0<\/p>\n \u201cThe closure of nickel mines in Australia and other allied nations [of Indonesia] has left the world highly reliant on Indonesian nickel. Western producers cannot compete with low-cost Chinese production in Indonesia,\u201d she adds.\u00a0<\/p>\n To sidestep such unprofitability without full investment in Indonesia\u2019s fluctuating nickel sector, some Australian companies have joint enterprise deals with Chinese counterparts. \u00a0<\/p>\n Examples include the long-standing agreement<\/a> between Australian company Nickel Industries (formerly Nickel Mines) and its partner Shanghai Decent Investment, which allowed Nickel Industries to purchase<\/a> a 70%\u00a0stake in the Angel Nickel project in Indonesia. Nickel Industries has also invested in the Hengjaya nickel iron project and has a partnership with Chinese operator Huayue Nickel Cobalt.\u202f\u00a0<\/p>\n The environmental cost\u00a0of the nickel rush<\/p>\n Indonesia has established a Ministry of Investment and Downstream Industry, promoting mineral down-streaming \u2013 or \u2018hilirisasi\u2019 \u2013 by banning exports on raw materials to encourage domestic processing. The hilirisasi policy aims to reduce reliance on coal through the downstream processing of mineral resources that are key to green industries, such as the manufacturing of EVs. However,\u00a0some analysts question whether it leaves Indonesia caught between the need to go green and the financial benefits of coal and Chinese investment.\u00a0\u00a0<\/p>\n Despite Indonesia\u2019s green mining ambitions, widespread reports of poor environmental, social and governance (ESG) records reveal that the hunt for nickel continues to damage key ecological sites.\u00a0<\/p>\n In the Raja Ampat archipelago, a group of small islands in Indonesia\u2019s Southwest Papua Province, known as the Amazon of the Seas for its marine biodiversity, nickel mining has stripped forests and polluted waters. \u00a0<\/p>\n Photographs taken by\u202fGlobal Witness as part of an investigation<\/a> appear to show the environmental damage already inflicted, with widespread forest loss and sediment run-off into waters that are home to biodiverse coral reefs.\u00a0\u00a0<\/p>\n In June, the Indonesian Government revoked<\/a> permits for four out of five mining companies operating in the region, a decision closely monitored by the private sector and campaigners alike.\u00a0\u00a0<\/p>\n While President Subianto\u2019s government has promised industrial growth and mass mineral production, it released a statement<\/a> saying that: \u201cRaja Ampat\u2019s biodiversity is a world heritage that must be protected \u2013 we pay close attention to mining activities that occur in the area.\u201d\u00a0<\/p>\n Raja Ampat is far from unique. Nickel mining concessions on the island of Halmahera have resulted in at least 5,331 hectares<\/a> of deforestation, leading to a loss of more than two tonnes of greenhouse gases stored in the forest. Mine waste and oil are also regularly dumped in fresh water, creating significant consequences for fishing and drinking water, undermining food security and creating health problems. <\/p>\n![\"\"\/](\"https:\/\/www.mining-technology.com\/wp-content\/themes\/goodlife-wp-B2B\/assets\/images\/GMS-logo.svg\"){kind=logo}
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A map of the 357 nickel mining projects across Indonesia. Credit: China-Global South Project.<\/p>\n
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