Article Sidebar

Download
PDF
Statistic
Read Counter : 14 Download : 1

Main Article Content

Abstract

This study analyzes Indonesia's strategic role in the global nickel industry and its implications for geopolitical dynamics, particularly in the context of the rivalry between the United States and China in the electric vehicle battery sector. Despite its possession of the world's largest nickel reserves, Indonesia faces considerable challenges due to domestic policies, including the prohibition of nickel ore exports and the preponderance of Chinese investment. The enactment of the U.S. Inflation Reduction Act (IRA) has further exacerbated the already complex situation in Indonesia by imposing restrictions on subsidies for battery materials, thereby limiting their availability to those sourced exclusively from official U.S. trading partners. This research utilizes a qualitative approach and a literature study to reveal that the Republic of Indonesia is currently confronted with a complex geopolitical dilemma. It is imperative to implement a hedging strategy to ensure the maintenance of balanced relations with both major powers while concurrently expanding strategic partnerships with other nations. The findings offer policy insights that could be used to strengthen Indonesia's role in the global clean energy supply chain.

Keywords

Geopolitics Nickel Indonesia Electric Vehicle Batteries Hedging Strategy

Article Details

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

How to Cite
Mulyono, A. M., R. Dudy Heryadi, & Akim. (2025). Geopolitical Influences in Indonesia’s Nickel Industry. Ilomata International Journal of Social Science, 6(4), 1268-1283. https://doi.org/10.61194/ijss.v6i4.1843

References

  1. Agung, M., & Adi, E. A. W. (2022). Peningkatan Investasi Dan Hilirisasi Nikel Di Indonesia. Jurnal Ilmu Sosial Dan Pendidikan (JISIP), 6(2), 4009–4020. http://dx.doi.org/10.58258/jisip.v6i2.3085
  2. Al Amin. (2025). Sino-Indian rivalry in Indo-Pacific and Bangladesh’s geo-strategic hedging in response to its security threats. Discover Global Society, 3(1). https://doi.org/10.1007/s44282-025-00144-1
  3. Ali, M. I., Rahaman, M. A., Ali, M. J., & Rahman, M. F. (2025). The growth–environment nexus amid geopolitical risks: cointegration and machine learning algorithm approaches. Discover Sustainability, 6(1). https://doi.org/10.1007/s43621-025-00872-z
  4. Bakry, U. S. (2023). Metode Penelitian Hubungan Internasional (4th ed.). Pustaka Pelajar.
  5. Barizi, M. H., & Triarda, R. (2023). Rantai Pasokan Global Dan Nasionalisme Sumber Daya Alam: Kajian Terkait Hilirisasi Nikel Di Indonesia. Indonesian Journal of International Relations, 7(2), 312–338. https://doi.org/10.32787/ijir.v7i2.466
  6. Camba, A. (2021). The unintended consequences of national regulations: Large-scale-small-scale relations in Philippine and Indonesian nickel mining. Resources Policy, 74(August), 102–213. https://doi.org/10.1016/j.resourpol.2021.102213
  7. Dogan, E., Majeed, M. T., & Luni, T. (2021). Analyzing the impacts of geopolitical risk and economic uncertainty on natural resources rents. Resources Policy, 72(January), 102056. https://doi.org/10.1016/j.resourpol.2021.102056
  8. Indonesia Investment Authority. (2025). Supporting Nickel Downstream Industry in Indonesia, Danantara Indonesia and INA Announce Strategic Partnership with Eramet. Indonesia Investment Authority. https://www.ina.go.id/press-release/supporting-nickel-downstream-industry-in-indonesia-danantara-indonesia-and-ina-announce-strategic-partnership-with-eramet?file=en
  9. Khalil, S. B., & Broughel, A. (2025). Stainless success, battery lag: Evaluation of Indonesia’s resource nationalism in nickel. The Extractive Industries and Society, 23. https://doi.org/10.1016/j.exis.2025.101677
  10. Kusumadewi, H., & Wiswayana, W. M. (2024). Multilevel Hedging for Middle-Regional Power: Indonesia Ascent Toward Powerhood Through Hedging. Indonesian Journal of International Relations, 8(2), 392–413. https://doi.org/10.32787/ijir.v8i2.591
  11. Lamont, C. (2015). Research Methods in International Relations (N. Aguilera, Ed.). SAGE Publications Inc.
  12. Lin, B., & Zhang, Z. (2025). Geopolitics of renewable energy development: The role of energy metals. Energy Policy, 198(July 2024), 114482. https://doi.org/10.1016/j.enpol.2024.114482
  13. Lu, C. (2024, August 8). Can Indonesia’s Nickel Industry Break Free from China’s Grip? Foreign Policy Analysis. https://foreignpolicy.com/2024/08/08/indonesia-nickel-china-us-critical-mineral-inflation-reduction-act/
  14. Marwanto, Rumiartha, I. N. P. B., & Putri, M. (2024). Business on Nickel Down Streaming with China and European Union Lawsuits at World Trade Organization. Jurnal IUS Kajian Hukum Dan Keadilan, 12(2), 316–329. https://doi.org/10.29303/ius.v12i2.1381
  15. Mubah, A. S. (2019). Indonesia’s Double Hedging Strategy toward the United States-China Competition: Shaping Regional Order in the Indo-Pacific? Issues and Studies, 55(4), 1–27. https://doi.org/10.1142/S1013251119400071
  16. Müller, M. (2023). The ‘new geopolitics’ of mineral supply chains: A window of opportunity for African countries. South African Journal of International Affairs, 30(2), 177–203. https://doi.org/10.1080/10220461.2023.2226108
  17. Nadhif, A., & Suryadipura, D. (2023). Indonesia’s Commercial Diplomacy towards South Korea in Efforts to Realize EV Battery Project Investment Diplomasi Komersial Indonesia terhadap Korea Selatan dalam Upaya Realisasi Investasi Proyek Baterai EV. International Journal, 17(1), 215–238. https://doi.org/10.20473/JGS.17.1.2023.215-238
  18. Noussan, M., Raimondi, P. P., Scita, R., & Hafner, M. (2021). The role of green and blue hydrogen in the energy transition—a technological and geopolitical perspective. Sustainability (Switzerland), 13(1), 1–26. https://doi.org/10.3390/su13010298
  19. Obaidullah, M., & Howlader, M. R. (2025). Assessing geopolitical and socio-economic consequences of India-Bangladesh water disputes. Discover Global Society, 3(1). https://doi.org/10.1007/s44282-025-00137-0
  20. Oliveira, G. de L. T., Murton, G., Rippa, A., Harlan, T., & Yang, Y. (2020). China’s Belt and Road Initiative: Views from the ground. Political Geography, 82(March). https://doi.org/10.1016/j.polgeo.2020.102225
  21. Palle, A. (2021). Bringing geopolitics to energy transition research. Energy Research and Social Science, 81(January). https://doi.org/10.1016/j.erss.2021.102233
  22. Pandyaswargo, A. H., Wibowo, A. D., Maghfiroh, M. F. N., Rezqita, A., & Onoda, H. (2021). The emerging electric vehicle and battery industry in Indonesia: Actions around the nickel ore export ban and a SWOT analysis. Batteries, 7(4). https://doi.org/10.3390/batteries7040080
  23. Petrović, P., & Ostojić, I. (2025). Effects of policy induced uncertainty and geopolitical risk on renewable energy production: Econometric analysis. Renewable Energy, 255(May). https://doi.org/10.1016/j.renene.2025.123783
  24. Qaseem, F. I. (2023). The Analysis of Indonesia’s Nickel Export Affecting the Dynamic of Foreign Direct Investment (FDI) inflows in Indonesia: Multiple Regression Analysis. Cognizance Journal of Multidisciplinary Studies, 3(10), 240–252. https://doi.org/10.47760/cognizance.2023.v03i10.018
  25. Radhica, D. D., & Wibisana, R. A. (2023). Proteksionisme Nikel Indonesia dalam Perdagangan Dunia. Cendekia Niaga Journal of Trade Development and Studies, 7(1), 74–84. https://jurnal.kemendag.go.id/index.php/JCN/article/view/821
  26. Rakhmat, M. Z. (2025, April 8). U.S. Tariff War Could Deepen Indonesia’s Ties with China—But Jakarta Holds the Keys. Global South Project. https://chinaglobalsouth.com/analysis/u-s-tariff-war-could-deepen-indonesias-ties-with-china-but-jakarta-holds-the-keys/
  27. Reinpal, F., Almubaraq, H. Z., & Lelyana, N. (2023). Nickel Ban and Indonesia’s Defense: A WTO Dispute with Implications for National Security. JournaJournal of International Trade, Logistics and LawlofInter, 9(2), 1–9. https://doaj.org/article/4ab7669b7669468298263f2f48f0b861
  28. Rosmayanti. (2023, August 22). Hilirisasi Nikel Indonesia dalam Rivalitas Ekonomi dan Geopolitik antara AS dan China. Warta Ekonomi. https://wartaekonomi.co.id/read511517/hilirisasi-nikel-indonesia-dalam-rivalitas-ekonomi-dan-geopolitik-antara-as-dan-china?page=2
  29. Saadaoui, J., Smyth, R., & Vespignani, J. (2025). Ensuring the security of the clean energy transition: Examining the impact of geopolitical risk on the price of critical minerals. Energy Economics, 142(January), 108195. https://doi.org/10.1016/j.eneco.2025.108195
  30. Santoso, R. B., Moenardy, D. F., Muttaqin, R., & Saputera, D. (2023). Pilihan Rasional Indonesia dalam Kebijakan Larangan Ekspor Bijih Nikel. Indonesian Perspective, 8(1), 154–179. https://doi.org/10.14710/ip.v8i1.56383
  31. Setiani, H., Valennia, R., & Rusni, N. K. (2024). Nickel export ban policy in Indonesia - a path to sustainable economic development? EcoProfit: Sustainable and Environment Business, 1(2), 120–130. https://doi.org/10.61511/ecoprofit.v1i2.2024.468
  32. Singgih, V. (2024, January 29). Setumpuk masalah di balik investasi China - “Demam nikel membuat pemerintah kehilangan akal sehat.” BBC News Indonesia. https://www.bbc.com/indonesia/articles/cw4m1k0j7vro
  33. Smith, D. C. (2023). Geopolitical realities of the energy transition supply chain: energy security risks and opportunities. Journal of Energy and Natural Resources Law, 41(3), 233–239. https://doi.org/10.1080/02646811.2023.2230732
  34. Ursache, A. (2023). Critical Materials Raw as Leverage in Global Geopolitics. SCIENTIA MORALITAS - International Journal of Multidisciplinary Research, 8(2), 239–250. https://doi.org/10.5281/zenodo.10431662
  35. US Embassy Jakarta. (2023). Joint Statement of the Leaders of the United States and the Republic of Indonesia: Elevating Relations to a Comprehensive Strategic Partnership. U.S Embassy & Consulates in Indonesia. https://kemlu.go.id/portal/en/read/5499/siaran_pers/joint-statement-of-the-leaders-of-the-united-states-and-the-republic-of-indonesia-elevating-relations-to-a-comprehensive-strategic-partnership
  36. Wang, B., Wang, L., Zhong, S., Xiang, N., & Qu, Q. (2023). Assessing the supply risk of geopolitics on critical minerals for energy storage technology in China. Frontiers in Energy Research, 10(January), 1–13. https://doi.org/10.3389/fenrg.2022.1032000
  37. Webb, S., & Webb, B. (2010). Methods of Social Study. Cambridge University Press.
  38. Wijaya, T., & Jones, L. (2025a). Indonesia, nickel, and the political economy of polyalignment in the Second Cold War. Third World Quarterly, 1–20. https://doi.org/10.1080/01436597.2025.2465514
  39. Wijaya, T., & Jones, L. (2025b). Indonesia, nickel, and the political economy of polyalignment in the Second Cold War. Third World Quarterly, 1–20. https://doi.org/10.1080/01436597.2025.2465514
  40. Wijaya, T., & Jones, L. (2025c). Indonesia, nickel, and the political economy of polyalignment in the Second Cold War. Third World Quarterly, 1–20. https://doi.org/10.1080/01436597.2025.2465514
  41. Winanti, P. S., & Diprose, R. (2020). Reordering the extractive political settlement: Resource nationalism, domestic ownership and transnational bargains in Indonesia. Extractive Industries and Society, 7(4), 1534–1546. https://doi.org/10.1016/j.exis.2020.08.015
  42. Yuniarto, B., Nurani, R., Apriyono, Rahmawati, R., & Nurfadilah, N. (2024). The Role of Geopolitics on Economic Growth in Indonesia. American Journal of Open Research, 3(9), 251–257. https://doi.org/10.59066/ijoms.v2i1.325