China, explained.
Smoke rises from Weda Bay Industrial Park, a major nickel processing and smelting hub in Central Halmahera, on 13 April 2025 (Yasuyoshi Chiba/AFP/Getty Images)
While Chinese firms capitalise on the country’s resources, the social and environmental damage lies squarely with Jakarta.
Subscribe to The Informer for monthly expert analysis, and to Events for advance notice of visiting world leaders and distinguished guests.
You may unsubscribe from Lowy Institute newsletters at any time. For information on our privacy practices and how to unsubscribe, see our Privacy Policy.
China isn’t the main culprit in Indonesia’s dirty nickel boomChina isn’t the main culprit in Indonesia’s dirty nickel boom
The destruction of Indonesia’s rainforests and reefs in the name of green energy is a tragedy, but not one that can be pinned solely on China.
Yes, China has played a central and highly visible role in Indonesia’s nickel boom. It is the largest consumer of Indonesian nickel, the primary financier behind smelters and industrial parks, and a dominant foreign actor influencing how extraction unfolds. But Chinese companies do not force their way into Indonesia’s forests – they are merely capitalising on the rules, and loopholes, established by the Indonesian state.
To understand how the world’s largest nickel reserves are being transformed into sacrifice zones, we must begin with a critical truth: the rush to exploit these resources is not driven solely by foreign demand, but by domestic politics and governance choices made in Jakarta.
While Chinese firms certainly profit from this permissive and often corrupt environment, it is Indonesian authorities who enable and perpetuate it.
It is Indonesia that grants mining permits – often through processes vulnerable to corruption. It is Indonesia that oversees (or fails to oversee) environmental and labour assessments. It is Indonesia that silences youth activists and sidelines Indigenous communities when they speak out against these projects. While Chinese firms certainly profit from this permissive and often corrupt environment, it is Indonesian authorities who enable and perpetuate it.
A recent case from Raja Ampat, a remote archipelago in West Papua, underscores the stakes of Indonesia’s nickel rush. Last month, Indigenous youth disrupted a mining summit in Jakarta, holding signs reading “Nickel Mines Destroy Lives”. Their viral protest, under the hashtag #SaveRajaAmpat, drew attention to the threat that nickel extraction poses to their home. Several protesters were detained.
Raja Ampat, renowned for its marine biodiversity and Indigenous communities, is already reeling from the impacts of nickel mining. Of the four companies licensed to operate in the region, PT Anugerah Surya Pratama – linked to China’s Vansun Group – cleared protected forests and polluted the sea around Manuran Island. Indonesia’s Ministry of Environment confirmed these violations. Only after public outcry did the government revoke the permit, but by then, much of the damage had already been done.
Workers at the Indonesia Morowali Industrial Park sit in traffic after a shift change at the nickel processing hub (Ulet Ifansasti/Getty Images)
The mining boom is not confined to far-flung Papua. In Central Sulawesi, Morowali has become the beating heart of Indonesia’s nickel processing industry. The Indonesia Morowali Industrial Park (IMIP), largely financed and constructed by Chinese companies such as Tsingshan Holding Group, stands as a flagship Belt and Road project. But its meteoric rise has come at an enormous cost: air and water pollution, deforestation, and rising greenhouse gas emissions in what was once promoted as a “green” zone.
The social toll is just as severe. Labour conditions at IMIP have raised alarms, with reports of long hours, meagre pay, poor safety standards, and frequent accidents. Tensions between Chinese and Indonesian workers have flared into violence on multiple occasions. Yet despite these concerns, the park continues to expand. The economic incentives for all parties are simply too great, and regulatory enforcement is often undermined by corruption. Indonesia’s 2020 ban on nickel ore exports – intended to promote domestic value-added processing – successfully attracted foreign capital. But the regulatory framework governing labour rights, environmental protections, and community engagement has failed to keep pace.
A similar pattern has taken root in Weda Bay, Halmahera. There, vast industrial complexes built by Chinese and French firms have reshaped the landscape. Forests have been razed, rivers contaminated, and traditional livelihoods upended. Promises of economic opportunity have been hollowed out as locals report being excluded from decision-making and witnessing a growing divide between investors and communities.
No labour abuses, environmental violations, or community displacements occur without institutional neglect – often compounded by corruption.
Indonesia’s failures are not isolated – they are systemic. Environmental impact assessments are routinely manipulated, labour standards poorly enforced, and Indigenous voices sidelined. Corruption facilitates these breaches, creating an environment where compliance is optional. The most powerful investors – Chinese state-linked enterprises among them – adapt accordingly.
Still, this does not absolve China. As the global leader in battery production and the architect of the Belt and Road Initiative, China has committed to making its development model “green and sustainable”. Yet it continues to finance and profit from operations that destroy ecosystems, exploit labour, and marginalise communities. What Beijing would never tolerate on its own soil – clear-cutting protected forests or operating in unsafe conditions – it enables abroad.
If China truly intends to lead the global energy transition, it must hold its companies accountable. This means refusing to finance environmentally destructive projects, setting higher standards for overseas operations, and enforcing consequences for corporate misconduct – not just when global outcry forces its hand.
But ultimately, the responsibility lies with Indonesia. No Chinese company can operate in Indonesia without state approval. No labour abuses, environmental violations, or community displacements occur without institutional neglect – often compounded by corruption. If Indonesia hopes to be seen as a responsible steward of its natural wealth, it must overhaul how mining projects are licensed, monitored, and enforced. It must empower Indigenous peoples and protect workers with the same urgency it grants mining permits.
Indonesia’s nickel boom is a test of the country’s ability to balance economic growth with sustainable governance. From Raja Ampat to Morowali, the impact of unchecked mining is evident – forests are cleared, labour is exploited, and communities are displaced.
We cannot place the blame squarely on China. But we must acknowledge that Indonesia’s governance – and the corruption within it – ultimately sets the terms.
About the author
Muhammad Zulfikar Rakhmat
Muhammad Zulfikar Rakhmat Director of China-Indonesia Desk at Center of Economic and Law Studies (CELIOS) in Jakarta.
The most-pressing world events explained by Lowy Institute experts and global contributors, in your inbox, every Thursday.
You may unsubscribe from The Interpreter at any time. For information on our privacy practices and how to unsubscribe, see our Privacy Policy.
