Indonesia's battery ecosystem leans on China

Chinese capital and technology are keeping Indonesia's integrated battery-manufacturing dream alive, but heavy dependence on China and the rise of nickel-free alternatives cloud its future. This follows the South Korean firm LG Energy Solution scrapping an $8.45 billion investment in Project Titan last year, according to a report by Climate Home News.

A Chinese consortium stepped in with a $6-billion investment and cooperation framework earlier this year to sustain Project Titan. The initiative aims to tap nickel reserves in East Halmahera and produce batteries over 2,000 kilometres away in West Java.

A Chinese tale of two halves

Chinese investment has been central to developing Indonesia's nickel reserves, the world's largest. Researcher Berlin Syahputra Situmorang told Climate Home News that China was the main engine behind Indonesia's push to refine nickel domestically after a 2020 raw ore export ban. Billions were invested in refining capacity, often within coal-powered industrial parks linked to environmental and human rights abuses.

However, Indonesia's real success has been in stainless steel, not batteries. Analysis by the Centre for Research on Energy and Clean Air (CREA) shows more than 80% of Indonesia's nickel supplied the stainless steel sector in 2025, with only 17% entering the EV battery supply chain.

"It's a tale of two different parts," said Lloyd Hain of Xenith Market Services. "Indonesian stainless steel goes all over the world. The battery side, however, has been a completely different story."

An emerging battery ecosystem

Developing a battery industry has proved more difficult. Several plants to process nickel into battery-grade materials are planned or under construction, but many remain at early stages. Indonesia's battery exports still exceeded $1 billion in 2025, according to UN Comtrade data. CREA estimates 30% of Indonesia's nickel production will go towards making battery materials by 2028.

The nation's first battery cell plant in Karawang, West Java, began operating in 2024, developed by Hyundai and LG Energy Solution. Project Titan itself aims for 20 gigawatt hours (GWh) of capacity to produce nickel-based EV and energy storage batteries.

Under the new deal, it will be operated by Indonesian state companies and a consortium including China's Zhejiang Huayou Cobalt and EVE Energy. Another $5.9-billion joint venture with a consortium led by Chinese battery giant CATL will develop mining, processing, a recycling factory, and a 6.9 GWh battery facility.

Minister Bahlil Lahadalia stated this collaboration is expected to encourage technology transfer. Yet, Zulfikar Rakhmat of the Center of Economic and Law Studies warned, "We get cash but there is no tech transfer or skilled labour jobs." He said Indonesia's dependence on China for funding and processing is "almost total".

Situmorang echoed this, stating that without technology transfer, Indonesia risks remaining dependent on external players for the most advanced parts of the value chain.

Forging a path of its own

Indonesia's reliance extends to key battery material imports like lithium and graphite from China. Rakhmat suggested Indonesia should diversify partners by working more with South Korean companies and seek supply deals with producers like Australia. He also emphasized investing in domestic research and talent.

Research fellow Shen Wei said the Indonesian government must decide whether to integrate its battery ecosystem "completely and unconditionally" into China's supply chain or go its own way. He warned it would be inherently difficult to learn from China while trying to compete with it.

Tensions are evident. The Chinese Chamber of Commerce warned President Prabowo Subianto in May that recent policies, including a sharp reduction in nickel ore production quotas to push up prices, could undermine existing projects.