Indonesia, explained.
Copper cathode sheets at a yard in China. Indonesia is determined not to see a repeat of the local nickel industry which is heavily dominated by Chinese firms (Zhou Xiuyuchun/Xinhua via Getty Images)
Indonesia’s mineral transformation from raw exports to refined power shows the benefit of resource nationalism.
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The copper gambit: How Indonesia turned a trade war into strategic leverageThe copper gambit: How Indonesia turned a trade war into strategic leverage
Following a high-stakes negotiation with Indonesia’s President Prabowo Subianto, US President Donald Trump boasted that his tariff policy had delivered a resounding win for the United States: full access to Indonesia’s vast mineral sector, particularly its copper reserves.
Yet behind the scenes, deft diplomacy prevailed. For Indonesia, the story is not submission, but a bold assertion of sovereignty through industrial policy. The era of Indonesia supplying raw commodities without added value is ending.
Indonesia, with an estimated 21 million metric tons of copper reserves, the seventh-largest in the world, has quietly become a frontline state in the global mineral arms race. In 2024 alone, it matched US copper production at 1.1 million tonnes. Yet unlike the United States, which remains chronically dependent on copper imports from Latin America, Indonesia has begun turning its mineral wealth into national leverage. Jakarta has prohibited the export of raw mineral ores, including copper concentrates. Only refined copper, at minimum cathodes, may be shipped abroad.
This shift is not just economic; it is geopolitical. As copper’s strategic value surges due to its unmatched conductivity and essential role in everything from EVs to power grids, semiconductors, and clean energy infrastructure, resource diplomacy is becoming the new frontier of global power. Indonesia is playing that game on its own terms.
Indonesia no longer wants to simply dig and export; it wants to refine, manufacture, and lead.
Even Freeport Indonesia (PTFI), operating in Papua and partially owned (48.8%) by US-based Freeport-McMoRan (FCX), must now comply with the national rule. Freeport-McMoRan’s legacy in Indonesia dates back to its 1988 discovery of the Grasberg deposit, one of the richest copper and gold finds in the world. For decades, critics accused the company of profiting disproportionately from Indonesian resources, with little local benefit. That changed in 2018, when the Indonesian government acquired a 51% stake in PTFI, a landmark divestment deal that rebalanced control over the mine and set the stage for Indonesia’s broader push toward resource nationalism.
Now, with the world’s largest single-line copper smelter, operating in Gresik, East Java, the government’s industrial ambitions are materialising. Indonesia no longer wants to simply dig and export; it wants to refine, manufacture, and lead. It seeks to climb the value chain, not remain stuck at the bottom of it.
This ambition clashes with the expectations of powerful trade partners. The United States, under Trump’s transactional leadership, sees Indonesia’s copper as a critical input in securing its industrial future. Washington is scrambling to diversify supply chains away from China, and Indonesia’s copper, abundant and increasingly refined, is viewed as a safe, strategic alternative.
But Jakarta is not naïve. It has watched as its nickel sector became heavily dominated by Chinese firms, with companies such as Tsingshan Holding Group and Jiangsu Delong Nickel Industry Co. controlling more than 70% of refining capacity and reportedly upward of 90% of mining concessions. While these partnerships boosted output, they also made Indonesia increasingly dependent on Chinese technology, capital, and pricing.
The government is determined not to repeat this pattern with copper. Unlike the nickel boom – often described as a “China play” – Indonesia’s copper policy is structured to ensure balance. Freeport’s continued presence ensures US technical expertise remains, while the state ensures that national interests are upheld through equity control, export restrictions, and industrial planning.
Freeport Indonesia’s Grasberg copper and gold mining complex in Papua province has seen longstanding social grievances, and environmental issues remain sensitive (Dadang Tri/Bloomberg via Getty Images)
The stakes are high. Global demand for copper is expected to double by 2035, driven by the energy transition and digital transformation. Yet new mines take decades to develop, and political risk is rising in traditional supplier countries. In this context, Indonesia’s growing production, refining capacity, and policy clarity make it a rare bright spot.
But opportunity also brings responsibility. To fully capitalise on its copper advantage, Indonesia must address serious domestic challenges. Infrastructure gaps, inconsistent regulations, and bureaucratic inertia still deter investment. In Papua, where the Grasberg mine is located, longstanding social grievances and environmental issues remain sensitive. Transparency, community engagement, and sustainable development will be crucial to preserving the industry’s social license to operate.
Meanwhile, the downstreaming policy itself must be executed with realism. Building smelters and refining infrastructure takes time, technology, and vast capital. If enforced too rigidly, export bans could choke cash flows and discourage long-term investment. The government must strike a delicate balance between strategic control and commercial viability.
In the realm of international diplomacy, Indonesia must also avoid overpromising access to either superpower. Trump’s statement of “full access” may be more rhetorical than real, but it reflects a growing expectation from Washington. Jakarta must make clear that strategic partnerships will be conducted on equal terms – respecting national sovereignty, industrial goals, and environmental standards.
Indonesia’s approach to copper may serve as a blueprint for how resource-rich developing nations can navigate great power competition. By asserting control over extraction, demanding value addition, and carefully managing foreign participation, Jakarta is charting a path toward mineral sovereignty in the 21st century.
This is not about nationalism in isolation. It is about strategic autonomy. Indonesia recognises that its copper is not just a commodity – it is leverage in an age of fractured supply chains, climate imperatives, and digital revolutions. And for once, it is using that leverage wisely.
As the world’s industrial giants scramble for control over critical minerals, Indonesia is demonstrating that even in the shadow of Trump’s tariffs and China’s dominance, a middle power with clear vision and bold leadership can shape its own destiny.
About the author
Akhmad Hanan
Akhmad Hanan is an independent Indonesian researcher specialising in geopolitics and energy.
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