ASIATODAY.ID, JAKARTA – China’s dominance in Indonesia’s downstream industries continues to grow, with Chinese investors securing strategic positions in key national projects—from nickel processing to coal gasification—many of which had stalled after being abandoned by Western partners.
On May 25, 2025, Indonesian President Prabowo Subianto and Chinese Premier Li Qiang witnessed the signing of a series of Memorandums of Understanding (MoUs) totaling IDR 162 trillion (approx. USD 10.2 billion). These agreements span eight strategic sectors, including mineral downstream processing, clean energy, manufacturing, digital economy, healthcare, and food security.
A notable agreement was signed between Indonesia’s sovereign wealth fund, Danantara, and the China Investment Corporation (CIC), laying the foundation for joint investments across Indonesia, ASEAN, and China.
Chinese Companies Eye Coal-to-DME Project Revival
One of the most sought-after downstream projects is the coal gasification project aimed at producing dimethyl ether (DME)—a potential substitute for liquefied petroleum gas (LPG). The project had previously stalled following the withdrawal of U.S.-based Air Products & Chemicals Inc. (APCI). The Prabowo administration is now reviving this national strategic project.
Originally, APCI partnered with Indonesian state-owned enterprises PT Bukit Asam Tbk. (PTBA) and PT Pertamina (Persero) to develop a DME production facility in Muara Enim, South Sumatra. Following APCI’s exit, PTBA began exploring partnerships with several Chinese firms.
According to PTBA President Director Arsal Ismail, discussions are underway with potential partners, including CNCEC, CCESCC, Huayi, Wanhua, Baotailong, Shuangyashan, and ECEC. So far, only ECEC has formally expressed investment interest, though not yet for full-scale funding.
“Out of all potential partners, only ECEC has shown interest in becoming an investor, though not under a full investment scheme,” Arsal stated during a parliamentary hearing on May 5, 2025.
ECEC had submitted a preliminary proposal for the coal-to-DME project in November 2024. Meanwhile, PTBA continues land acquisition efforts, securing 198 hectares or 97% of the 203 hectares required. The company is also actively coordinating with the Downstream Task Force, State Secretariat, Ministry of Industry, and other regulatory bodies to ensure project execution aligns with national policies.
Chinese Investors Dominate Indonesia’s Nickel-to-Battery Supply Chain
In addition to coal, Chinese firms are increasingly controlling Indonesia’s nickel downstream industry, especially in the electric vehicle (EV) battery supply chain. Most recently, the Indonesian government appointed Zhejiang Huayou Cobalt Co. as a strategic partner to replace the South Korea-led consortium—formerly led by LG Energy Solution—in a battery supply chain project valued at USD 8.6 billion.
Huayou’s entry solidifies China’s grip on Indonesia’s nickel industry. The company joins other Chinese metal giants such as Tsingshan Group and Jiangsu Delong Nickel Industry Co., which already dominate the local nickel smelting sector.
Another major player, China’s top EV battery maker Contemporary Amperex Technology Co. Ltd. (CATL), through its subsidiary CBL International Development Pte Ltd., has formed a joint venture with Indonesia’s state-backed Indonesia Battery Corporation (IBC). Their joint project—known as the Dragon Project—will build a 15 GWh battery cell plant with an investment of USD 1.18 billion (approx. IDR 19.13 trillion).
Minister of Investment Rosan P. Roeslani revealed that Huayou has already invested USD 8.8 billion in Indonesia and is considering an additional USD 20 billion in future developments.
“Huayou is also exploring the development of a new industrial park in Pomala, Southeast Sulawesi—similar to the ones in Morowali and Weda Bay,” Rosan stated.
This move illustrates Huayou’s long-term commitment to Indonesia’s EV ecosystem. While China is a major player, Indonesia remains open to partnerships with investors from other countries.
Minister of Energy and Mineral Resources Bahlil Lahadalia confirmed that a new investor will soon join the battery project alongside Huayou. While the name and country of origin remain undisclosed, Bahlil affirmed that the new partner is among the world’s top seven companies and has passed Indonesia’s strict investment criteria.
“We’re not focused on which country the investors come from—China, the Middle East, Europe, or Korea. What matters is that they are serious and compliant,” Bahlil said on April.
With China leading or co-leading nearly every major downstream project in Indonesia—from coal-to-DME plants to battery and nickel smelters—the country’s role as a strategic economic partner is undeniable. Nonetheless, the Indonesian government insists that its doors remain open to all credible investors who share its vision for industrial transformation and sustainable growth. (AT Network)
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