On January 29, The Strategist, a publication of the Australian Strategic Policy Institute (ASPI), published a contribution by Kuma Yung, Non-Resident Fellow at DSET’s Energy Resilience Program, Elizabeth Frost, Policy Analyst, and Yun-Ling Ko, Correspondent. The article argues that China is using Indonesia’s nickel industry as a template to construct a replicable and scalable overseas critical-minerals investment model, thereby consolidating its dominant position in global critical-minerals supply chains.

The article notes that Indonesia holds more than half of the world’s nickel reserves and accounts for 45 percent of global refined nickel production. However, Chinese companies control approximately 60 percent of global refined nickel capacity. Findings from DSET’s December 2025 policy report, Unveiling the Hidden Agenda Behind China’s Green Ambitions, indicate that China leverages Indonesia to secure access to raw materials and low-cost production. This strategy not only helps Chinese firms circumvent U.S. trade barriers but also enables them to establish a near-monopolistic position in Indonesia’s nickel sector, creating non-negligible dependency risks across global critical-minerals supply chains.

The article further examines China’s investment in Indonesia’s Morowali Industrial Park, highlighting how Tsingshan Group, a Chinese private conglomerate, entered the project in 2009 through joint ventures with Indonesian firms and rapidly scaled up its investment following Indonesia’s 2014 ban on nickel ore exports. With policy support under China’s Belt and Road Initiative, Tsingshan progressively expanded its operations into battery-grade nickel chemicals and battery electrode material recycling, achieving a highly vertically integrated industrial structure.

Over the same period, industrial parks such as Weda Bay and Pomalaa in Indonesia have replicated the Morowali model. As financing structures shifted toward commercial bank–led lending, an increasing number of Chinese firms from non-mining sectors—including battery manufacturing and recycling—have entered these parks, accelerating the integration and consolidation of electric-vehicle industrial ecosystems.

The article points out that Chinese companies now control approximately 75 percent of Indonesia’s nickel refining capacity. This concentration has raised concerns over “green extractivism” and underscores the structural risks associated with China’s long-term dominance in Indonesia’s critical-minerals investment landscape.

In conclusion, the article observes that Indonesia’s experience has encouraged China to replicate this model across other overseas critical-minerals investments, including copper mining and processing in Peru and cobalt investments in the Democratic Republic of the Congo. Across these cases, a common pattern emerges: China leverages overseas economic and trade cooperation zones to enable firms to pursue overseas expansion through an industrial-cluster–based approach.

The Australian Strategic Policy Institute (ASPI) is an independent think tank based in Australia, focusing on defence and strategic policy, cybersecurity and technology security, and broader national security issues.