The Scramble for Indonesia w/ video clips and notes

Full video: Why everyone should watch out for Indonesia

Video clips and notes:

[07-11-24] CSIS: Diversifying Investment in Indonesia’s Mining Sector

However, Chinese firms have dominated Indonesia’s nickel sector thanks to significant investments. In 2023, Indonesia was the single biggest recipient of China’s Belt and Road Initiative, receiving $7.3 billion in investment. Chinese companies have also constructed over 90 percent of Indonesia’s nickel smelters. Chinese firms operating in Indonesia include Tsingshan Holding Group, Zhejiang Huayou Cobalt, Ningbo Lygend (part of CATL Group), Wuling Motors, and China Molybdenum Company. Lower environmental standards and labor costs from some Chinese firms have contributed to lower production costs, undermining the competitiveness of other foreign firms. Cash costs for high-pressure acid leach operations, most of which are Chinese owned, are $3.17 per pound, compared to $6.56 per pound at Sorowako and $8.24 per pound at Weda Bay, both owned by PT Vale Indonesia Tbk, the subsidiary of Brazilian company Vale Base Metals. Nickel produced in Indonesia is also cheaper than what’s produced in Canada, Australia.

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A lingering downside of the legal framework for investors is the requirement that foreign-owned mining companies gradually divest 51 percent of their ownership to Indonesian entities, with priority offer given to the central government, regional governments, state-owned enterprises, and lastly to private Indonesian entities and/or via local listing on the Indonesian Stock Exchange. For foreign firms operating in Indonesia prior to 2009, this novel requirement presented them with two alternatives: (a) take the government to arbitration and forfeit access to these deposits in the future or (b) accept the ownership limitations under the condition that they retain full operational control. In light of local companies’ limited technical and professional capability to operate them effectively, this accommodation has become common for foreign miners still operating in Indonesia. For prospective foreign entrants, this divestment requirement presents a higher hurdle as they have far less bargaining power.

U.S.-Indonesia Commitment to Building Bilateral Minerals Diplomacy

Following a rollout of Chinese export restrictions on various commodities in 2023, the United States and its allies have accelerated efforts to reduce dependence on Chinese minerals and metals. Given that the United States has less than 1 percent of the world’s nickel, it’s imperative that it has a strong bilateral relationship with the world’s largest nickel producer. For Indonesia, diversifying away from China can help reduce vulnerability and create new market access.

In November 2023, President Joe Biden and Indonesian president Joko Widodo advanced bilateral ties to a Comprehensive Strategic Partnership. As a joint statement from both heads of state released by the White House noted,

President Biden and President Joko Widodo recognize Indonesia’s global leadership in the nickel, cobalt, and other critical minerals value chains, the United States’ significant critical mineral resources, and the Biden Administration’s commitment to developing the full U.S. critical mineral supply chain. They emphasize the opportunity to create high-standard clean energy supply chain jobs in both countries through a robust partnership between the United States and Indonesia that leads to mutually beneficial development of domestic resources in accordance with fair market-based rules.

[07-08-24] Indonesia says US must invest amid critical minerals race

Indonesia Investments: Masterplan for Acceleration and Expansion of Indonesia’s Economic Development

[Updated 07-08-24] CIA World Factbook: Indonesia

Indonesia is the fourth most populous nation in the World after China, India, and the United States.

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Natural resources

petroleum, tin, natural gas, nickel, timber, bauxite, copper, fertile soils, coal, gold, silver

note: Indonesia is the World’s leading producer of nickel with an output of 1.6 million mt in 2022

[09-27-23] U.S. Department of Commerce, International Trade Administration: Indonesia Critical Minerals

Indonesia’s critical minerals market offers many opportunities to U.S. companies.

Indonesia Ranks Sixth in ASEAN in 2023 Corruption Perception Index

Transparency International

CIPE, Center for International Private Enterprise, CIA, Central Intelligence Agency, National Endowment for Democracy, Open Society Foundations, George Soros, Multinational corporations, Whitewashing, Big Corporations, Corruption Perception Index