Indonesia's Battery Ambitions Hinge on Chinese Investment Amid Risks

China's battery ambitions face uncertainty despite Chinese investment in Indonesia's nickel sector. Project Titan, an initiative to develop a battery manufacturing ecosystem in Indonesia, has received a lifeline through a $6 billion investment from Chinese companies after South Korean firm LG Energy Solution withdrew its planned $8.45 billion investment in 2023.

The project aims to utilize Indonesia's vast nickel reserves in East Halmahera, the center of nickel mining in the country, and ship processed materials to a factory in West Java to produce batteries for electric vehicles (EVs). Initially, the project faced delays due to stalled feasibility studies, even before LG Energy Solution's withdrawal.

The recent investment and cooperation framework between Indonesian state companies and a Chinese consortium, including Zhejiang Huayou Cobalt and EVE Energy, has kept Project Titan alive. However, this highlights Indonesia's heavy reliance on China for capital, technology, and materials in battery manufacturing.

Zulfikar Rakhmat, director of the China-Indonesia Desk at the Jakarta-based Center of Economic and Law Studies, noted that while Indonesia gains cash from Chinese investments, there is little technology transfer or skilled labor opportunities. "We get cash but there is no tech transfer or skilled labour jobs," Rakhmat said. He added that Indonesia's dependence on China for funding, nickel smelting, and processing capacity is "almost total."

The situation is further complicated by the increasing popularity of nickel-free battery alternatives, which could pose additional commercial risks for Indonesia's emerging battery industry. Rakhmat warned that if Indonesia's battery chain is seen as entirely Chinese-owned and coal-powered, its products may struggle to enter Western markets.

China has been instrumental in developing Indonesia's nickel refining capacity. After Indonesia banned the export of raw nickel ore in 2020, China invested billions to build refining facilities, leading to significant environmental and human rights concerns. By 2025, Indonesia produced two-thirds of the world's raw nickel supply and controlled 43% of nickel refining capacity, with 75% of that capacity owned by Chinese firms.

Despite these developments, Indonesia's primary success has been in the stainless steel industry, which consumes 80% of the country's nickel. Only 17% of nickel goes into the EV battery supply chain, according to the Centre for Research on Energy and Clean Air (CREA).

Developing a battery industry has proven challenging, with many plants still in early stages of development. However, Indonesia's battery exports exceeded $1 billion in 2025, and CREA estimates that 30% of the country's nickel production will go towards battery materials by 2028.

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

Another $5.9 billion joint venture between state firms and a consortium led by Chinese battery giant CATL will develop nickel mining, processing, and a battery-recycling factory in East Halmahera, as well as a 6.9 GWh battery facility in Karawang.

Indonesian Minister of Energy and Mineral Resources Bahlil Lahadalia expressed hope that collaboration with Chinese firms will encourage technology transfer, helping national companies become leaders in their own country. The Indonesia Battery Corporation (IBC), a state-owned enterprise, is tasked with developing the battery and EV ecosystem.

Berlin Syahputra Situmorang of the Indonesian Initiative for Sustainable Mining noted that the complexity of making batteries underlies Indonesia's dependence on Chinese know-how. Without technology transfer, Indonesia risks remaining dependent on external players for the most advanced parts of the value chain.

Indonesia's reliance on China extends beyond money and technical knowledge, with the country also importing key battery materials like lithium and graphite. Experts suggest that Indonesia should diversify its investment partners, seeking more collaboration with South Korean companies and long-term supply deals with major producers like Australia. Additionally, investing in domestic research and development and nurturing local engineering talent is crucial.

Shen Wei, a research fellow at the UK-based Institute of Development Studies, warned that Indonesia will ultimately need to decide whether to fully integrate its battery ecosystem into China's EV supply chain or pursue an independent path.

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