The Chinese Chamber of Commerce has sent a direct letter to President Prabowo Subianto protesting Indonesia's proposed nickel royalty increases and mining work plan regulations, marking a rare public confrontation between Jakarta and Beijing over the country's most strategic natural resource.
The protest, reported by Bloomberg Technoz, centers on Indonesia's plans to raise royalties on nickel mining and impose stricter requirements on annual work plans (RKAB), which Chinese investors argue could threaten the viability of existing projects and deter future investment.
Indonesia controls approximately 40% of global nickel reserves and has positioned itself as the linchpin of the electric vehicle battery supply chain through aggressive downstream processing requirements. Chinese companies have invested billions of dollars in Indonesian nickel smelting and processing facilities, making them the largest foreign players in the sector.
The direct appeal to Prabowo signals Beijing's concern about Indonesia's increasing assertiveness over natural resources. Unlike previous administrations that balanced nationalist rhetoric with investor-friendly implementation, Prabowo has demonstrated willingness to prioritize resource nationalism even at the cost of short-term investment.
"This is Indonesia flexing its leverage," said Ahmad Zaki, a mining policy analyst at the Center for Strategic and International Studies in Jakarta. "We have what China needs for its EV ambitions. The question is how far we can push before Chinese companies look elsewhere or the relationship suffers broader damage."
The Chinese Chamber's concerns focus on two key areas. First, the proposed royalty increases could significantly raise operating costs for Chinese-invested smelters, many of which operate on thin margins despite Indonesia's nickel abundance. Second, stricter RKAB regulations could limit operational flexibility and impose additional bureaucratic burdens on foreign operators.
For Prabowo, the nickel sector represents both economic opportunity and nationalist vindication. His administration has made clear that Indonesia will not simply serve as a raw material supplier but will capture maximum value through processing, refining, and eventual battery manufacturing.
The nickel dispute also intersects with broader Indonesia-China tensions. While Beijing remains Indonesia's largest trading partner and a crucial infrastructure financier, Jakarta has grown increasingly wary of economic dependency. The government has pushed for greater domestic participation in nickel projects and expressed frustration with Chinese companies' recruitment of Chinese workers rather than training Indonesian nationals.
China's investment in Indonesian nickel infrastructure has transformed the sector. Massive integrated facilities in Sulawesi and Maluku now process ore into nickel matte, ferronickel, and increasingly refined products like battery-grade nickel sulfate. These investments, totaling over $15 billion, have made Indonesia the world's dominant nickel producer.
Yet this dominance gives Jakarta significant negotiating power. Global battery manufacturers, predominantly Chinese, Japanese, and South Korean companies, cannot easily replace Indonesian supply. Alternative nickel sources in Australia, New Caledonia, and Philippines lack Indonesia's combination of reserves, processing capacity, and government support for downstream industries.
The Chinese Chamber's decision to appeal directly to Prabowo, rather than working through ministerial channels, suggests standard diplomatic and bureaucratic approaches have failed. It also indicates Beijing's calculation that Prabowo, despite his nationalist credentials, remains pragmatic enough to consider investor concerns when presented with direct economic consequences.
In Indonesia, as across archipelagic democracies, unity in diversity requires constant negotiation across islands, ethnicities, and beliefs. The nickel sector embodies this complexity: deposits concentrated in eastern Indonesia create wealth and employment but also environmental damage and social disruption, while benefits flow unevenly across Java's political center and the resource-rich outer islands.
The Investment Ministry and Energy Ministry have not yet publicly responded to the Chinese Chamber's letter. Industry sources suggest the government is preparing a comprehensive response that will address investor concerns while maintaining Indonesia's commitment to resource sovereignty and value-added processing.
For the global EV battery supply chain, the dispute adds uncertainty at a critical moment. As demand for electric vehicles accelerates, any disruption to Indonesian nickel supply or significant cost increases could ripple through battery manufacturers, automakers, and ultimately consumers worldwide.
