Indonesia is reshaping its growth model around resource value addition and clean industry.
Once reliant on raw commodity exports, the country is now turning its mineral wealth into the backbone of sustainable industrialisation — using renewable power, strategic partnerships, and domestic processing to drive long-term competitiveness.
Nickel at the Heart of a Green Strategy
Nickel remains central to Indonesia’s ambitions. The country supplies more than 45 per cent of the world’s nickel output and hosts vast reserves critical for electric-vehicle batteries. Following the government’s export ban on unprocessed ore in 2020, more than 50 smelters have been built or are under construction, particularly in Sulawesi and North Maluku.
According to the Ministry of Energy and Mineral Resources (ESDM), these projects are helping transform Indonesia into a global hub for battery materials. Integrated industrial parks, such as the Indonesia Morowali Industrial Park (IMIP) and Weda Bay Industrial Park (IWIP), combine nickel processing with power generation and logistics, creating self-contained ecosystems for sustainable manufacturing.
Moving Up the Battery Value Chain
The next stage is localisation of battery production. The Indonesia Battery Corporation (IBC) is partnering with Hyundai, LG Energy Solution, and Chinese manufacturers to develop full supply chains — from nickel sulfate to cathodes and EV battery packs.
These partnerships align with Indonesia’s Downstream Industry Acceleration Roadmap, which targets US$95 billion in annual export value from processed minerals by 2030. The government also offers tax incentives for high-tech investors under its Green Investment Taxonomy, ensuring industrial policy supports both growth and climate goals.
Renewable Energy Integration
Green industrialisation depends on cleaner power. State utility PLN has pledged to retire over 10 GW of coal capacity by 2040 while expanding renewables to 44 per cent of the energy mix. Solar farms in Sulawesi and hydropower projects in North Kalimantan are being integrated directly into industrial zones to power smelters and manufacturing plants.
These steps are critical to improving the carbon footprint of Indonesia’s export-oriented industries, a key requirement for access to European and North American markets. The country’s Energy Transition Mechanism (ETM), supported by the Asian Development Bank (ADB), provides blended finance to accelerate renewable adoption and early coal retirement.
Copper, Bauxite and Export Diversification
Beyond nickel, Indonesia is diversifying its resource base. The Freeport Indonesia copper smelter in Gresik, one of the world’s largest, is due to begin operations in 2025, adding refining capacity of 1.7 million tonnes per year. Meanwhile, bauxite refining in West Kalimantan is expanding under new downstream regulations.
These projects are reinforcing Indonesia’s strategy to export finished goods instead of raw materials. By linking mineral processing with manufacturing — from EV components to renewable energy equipment — Indonesia aims to capture a greater share of global value chains.
Investment and Regional Impact
The green industrialisation agenda is attracting unprecedented capital. Data from the Indonesia Investment Coordinating Board (BKPM) show that foreign direct investment in the metal, machinery, and electronics sectors grew 19 per cent year-on-year in the first half of 2025.
Beyond national growth, these investments are transforming regional economies. Infrastructure in eastern Indonesia has improved markedly, with new ports, railways, and power grids connecting industrial zones to export terminals. The long-term payoff is social inclusion — better jobs, higher wages, and a cleaner industrial base.
