Indonesia's nickel bet wobbles as electric cars change

Indonesia bet big on nickel to power the electric-car age, but that bet is looking shakier. As the Associated Press reports, the country now supplies about 60 percent of the world's nickel, up from under a third in 2020, just as many carmakers switch to a cheaper battery type, called LFP, that uses little or no nickel.

At home, the government has been seizing control of the industry. Its crackdown has taken over more than 4 million hectares of mines and plantations and handed out US$1.7 billion in fines, with millions more hectares possibly targeted this year. The aim is to keep more of the value in Indonesia. But the tough approach has spooked investors: the South Korean company LG pulled out of an US$8.4 billion battery plan in 2025.

Analysts warn Indonesia may be caught in between. The crackdown creates uncertainty without yet building the promised chain of factories that turn nickel into batteries and cars at home. Indonesia sold only about 43,000 electric cars in 2024, and even a huge jump would use just a sliver of its nickel. Now Jakarta is even weighing whether to lift its ban on exporting raw nickel to the US, as a favour in trade talks.

Why it matters

Nickel is central to Indonesia's plan to move up from selling raw materials to making high-value goods like batteries, which could mean better jobs. If the strategy stumbles or scares off investors, that promise fades. Watch whether the factories and value chain actually get built, or whether Indonesia stays stuck digging and shipping raw ore.