Geopolitics of Natural Resource Investment: A Case Study of Chinese Nickel Ventures in Eastern Indonesia
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Abstract
Global demand for nickel continues to increase as the clean energy transition and electrification of transportation accelerate. Indonesia is currently the world's largest nickel producer and to increase downstream added value, the Indonesian government has implemented a ban on the export of raw nickel ore since 2020, encouraging the development of domestic processing facilities. This study examines the geopolitical dimensions of Chinese investment in Indonesia’s nickel sector, focusing on major projects in Eastern Indonesia. Nickel, a crucial metal for the production of high-energy lithium-ion batteries, is at the center of global strategic competition, especially under China’s Belt and Road Initiative (BRI) and “Going Out” policy. Companies such as Tsingshan Holding Group, Ningbo Lygend Mining, and Huayou Cobalt have formed joint ventures to establish large-scale smelters and industrial parks in Sulawesi, North Maluku, and Papua. The main objectives of the research are to analyze how Chinese investment is changing the regional and global power map, assess the socio-economic and environmental impacts on local communities, and evaluate Indonesia's strategic position amidst competing interests. A qualitative-descriptive methodology with a case study approach is used, relying on secondary document analysis—including scientific journals, international organization reports, Indonesian government regulations, and media coverage, to construct thematic narratives on investment patterns, policy frameworks, and local responses. The study found that while Chinese capital and technology accelerated Indonesia’s downstream capacity and increased its share of global refined nickel production from 23% to 27% between 2020–2023, this growth has been accompanied by environmental degradation, labor disputes, and land rights conflicts. Industrial areas such as Morowali and Weda Bay have created tens of thousands of jobs, but their management has been dominated by Chinese expatriates and has fueled deforestation and water pollution. At the same time, Indonesia has used its “free-active” policy to attract diverse investors, seeking to balance resource sovereignty with the need for foreign capital. The study concludes that China's nickel investment in Eastern Indonesia reflects the close linkages between resource geopolitics and sustainable development. To optimize benefits and mitigate risks, strengthening environmental governance, enforcing labor standards, equitable distribution of income, and strategic flexibility in international partnerships are needed.
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