Indonesia invites India to take over its nickel mines: A 'pig-butchering' apprentice meets the master—so who’s really scamming whom?

By Wang Xinxǐ Just after slashing three major blows against Chinese investors—cutting export quotas by 70%, doubling ore prices, and imposing mandatory equity-transfer requirements—Indonesia has now rolled out the red carpet for Prime Minister Modi, hoping India will step up. The two countries have agreed to establish a joint venture in Indonesia to process critical minerals—including nickel—and gradually export them to the Indian market. China is the world’s largest producer of stainless steel and lithium-ion batteries, and thus has massive nickel demand; Indonesia is a primary supplier. But Indonesia is also signaling something else: it has plenty of backup suitors. With its 1.4-billion-person domestic market, India likewise needs stainless steel and electric vehicles—and can readily absorb Indonesia’s nickel supply. Many readers chuckle at this twist: Indonesia learned the ‘pig-butchering’ playbook from India itself—and now the apprentice has invited the master into the room. Is Indonesia attempting a counter-scam—or willingly handing over its own head? Without Chinese investment, Indonesia would still be selling raw laterite ore. Today, Indonesia struts confidently across the global nickel market—thanks entirely to Chinese enterprises. Back in 2014, nobody wanted Indonesia’s nickel ore. It had only raw ore—no technology, no capital, no industrial chain. Low-grade laterite nickel ore had stumped Western mining firms for decades; they never found a commercially viable processing method. Then the Indonesian government turned to Chinese companies for cooperation—and everything changed. Offering generous tax breaks, land incentives, and long-term mining quotas, Indonesia made a sincere pitch. And so came Tsingshan Holding, Huayou Cobalt, and Brunp Recycling. Over the past decade, Chinese firms have invested over $14 billion. They built power plants, ports, highways, and wastewater treatment facilities—all with their own funds. From Morowali to Weda Bay, they established the full value chain: nickel-iron smelting → high-grade nickel matte → battery-grade precursor materials. They laid out Indonesia’s entire nickel industry, clear as day. Indonesia’s ‘pig-butchering’ playbook: ‘Raise, Trap, Slaughter’—all in three steps. Once the industrial chain was built, Indonesia’s thinking shifted. Enter the classic ‘raise-trap-slaughter’ scheme. Step 1: ‘Raise.’ In the early days, Indonesia offered generous tax cuts, land subsidies, and guaranteed raw-material supplies—luring investors to build factories, fire up blast furnaces, and pour in billions. Step 2: ‘Trap.’ Then quotas shrank and approvals slowed. Want to pull out? Your $1–2 billion in fixed assets sit idle on-site—nobody walks away from that lightly. Once you’re fully trapped, Step 3—‘Slaughter’—arrives. With the new president taking office in 2026, Indonesia flips the table. First, nickel ore export quotas are slashed—cutting 70% from Chinese firms’ core Weda Bay mining area. Second, previously free-of-charge by-product metals (e.g., cobalt, chromium) are now separately priced and charged at premium rates—pushing overall ore prices up by 221%. Third, mining royalties and export tariffs rise sharply—and Chinese firms are forced to transfer equity stakes and hand over core technologies. Indonesia assumed Chinese firms would capitulate. After all, with such massive heavy-asset investments, who’d dare abandon them? Chinese firms strike back—hard. Starting in May, Indonesia’s smelting sector was rocked by successive shocks. Huayou Cobalt’s Huafei project cut output by 50%; Gravita suspended all new investments; Tsingshan halted operations at some mines. Indonesia’s domestic industry lacks both skilled technicians capable of operating these advanced systems and supporting local supply chains for parts and maintenance. If Chinese firms walk away, they can simply relocate and rebuild elsewhere—anywhere. Indonesia has no indigenous smelting technology: low-grade laterite nickel ore is just worthless dirt without it. Globally, only China’s proprietary process enables cost-effective processing of such ore.

Indonesia seeks India to take over its nickel mines—so who’s deceiving whom?

Yet Indonesia’s entire nickel industrial chain was built by Chinese enterprises—Tsingshan, Delong, Huayou Cobalt, CATL, and Gravita among others—with cumulative investment exceeding RMB 100 billion. Beyond nickel mining itself, Chinese investment covers supporting infrastructure—ports, power plants, and logistics networks—forming an integrated chain spanning ‘mines → nickel-iron → stainless steel → battery materials → new energy.’ But just months ago, Indonesia rolled out a customized ‘pig-butchering’ scheme—targeting precisely these Chinese firms. How did it work? 1. Quota cuts: Nickel mining quotas slashed by 34%; core Chinese mining areas hit with a 70% reduction—effectively cutting off raw material supply. 2. Price hikes: Raw ore costs surged by 220% overnight. 3. Tax & fee increases: Adjusted royalty rates and added export tariffs—directly breaching Chinese firms’ cost thresholds. 4. Forced equity transfer: Mandated 51% ownership stake ceded to Indonesian local firms—and required unconditional handover of the entire hydrometallurgical core process. 5. Foreign exchange controls: 50% of revenue must be converted into Indonesian rupiah and deposited in local banks for 12 months—locking up cash flow. 6. Heavy fines: Multiple Chinese firms slapped with penalties approaching $100 million each. What’s behind Indonesia’s provocative moves? It’s leveraging its mineral resources as bargaining chips—to unilaterally tear up prior agreements and bet that ‘Chinese firms won’t leave.’ With RMB 100 billion already sunk in, exit costs appear higher than staying put—so Indonesia aims to extract ever more profit from these stranded assets. But Chinese firms responded by flipping the table themselves. Output cuts, investment freezes, and plant shutdowns were just baseline responses. Some firms executed a hard withdrawal: dismantling production lines, loading equipment onto ships, and returning home—all within 21 days. Not a single machine was left behind; not a single technology transferred. With output gone, how does Indonesia earn revenue? At that very moment, the Philippines ramped up nickel exports—delivering a sudden, sharp ‘backstab.’ The Indonesian rupiah nearly collapsed.

India's Lohum seeks to buy nickel mines in Indonesia and the Philippines

17 hours ago

Indian critical minerals producer Lohum plans to acquire nickel mines in Indonesia and the Philippines to boost production tenfold while targeting lithium mining in Zimbabwe and new cathode plants to diversify battery supply chains.

reuters

2026-09-22

India's Lohum seeks to buy nickel mines in Indonesia and the Philippines

India's Lohum seeks to buy nickel mines in Indonesia and the Philippines

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