0:00 Within just 3 weeks, a 100 billion yuan production line was completely dismantled. Every piece of equipment was taken away, even the cranes and screws. In recent days, Chinese media outlets have suddenly published a series of reports on the withdrawal of a major Chinese nickel smelting company from Indonesia. The headlines and narratives have been almost identical. Chinese companies dismantled the entire production line and shipped it back to China in just 21 days. Not even a single screw was left behind for Indonesia. Who needs who more? Indonesia's dream shattered. The reports appear to suggest that Chinese companies have once again come out on top after rejecting what they described as Indonesia's attempt to reap the benefits from Chinese investment. But is that the case? Why
0:45 have Chinese state-affiliated media shown such intense interest in the withdrawal of a Chinese company, even portraying it with a sense of anger and frustration? Let's take a closer look. So far, Chinese media have not revealed which Chinese company allegedly removed its entire production line within 21 days. No company involved has publicly responded. Analysts believe the company may be Tsingshan Holding Group. What is known is that the troubles facing Chinese mining companies in Indonesia began about 5 months ago. In February, Indonesia's Ministry of Energy and Mineral Resources introduced four major measures, each targeting Chinese invested companies. The first was a cut to mining quotas. The Indonesian government sharply reduced nationwide nickel mining quotas by more
1:31 than 30%, lowering annual production from 375 million tons in 2025 to 260 million tons this year. Among them, the Weda Bay nickel mine, partly owned by Tsingshan, was hit the hardest. Its quota was slashed from 42 million tons after an increase in 2025 to just 12 million tons, a reduction of more than 70%. The second measure was a change in the pricing system. On April 15th, Indonesia implemented ministerial regulation number 144, revising the formula used to calculate the benchmark nickel price, known as HPM. For nickel ore with a 1.6% nickel grade, the adjustment coefficient was raised from 17% to 30%.
2:16 Meanwhile, cobalt, iron, and chromium, which had often been overlooked in raw ore transactions, would now also be priced separately based on their content. Based on metal prices at the time, a type of ore containing 1.5% nickel could see its mineral benchmark price rise from $26.66 per wet metric ton to $62.50, an increase of about 135%. For some low-grade ore used in high-pressured acid leaching hydrometallurgical projects, the increase could approach 200%. The third measure involved higher taxes and tighter controls. Indonesia significantly increased mining royalties and export taxes. Royalty rates were adjusted from 10% to a range
3:01 of 14 to 19%, while export duties was raised 5 to 15%. At the same time, companies were required to deposit export earnings to Indonesian state-owned banks for at least 12 months. Want to move the funds out earlier? That would no longer be allowed. The fourth measure involved stricter approval procedures. Starting in January, Indonesia changed its mining production approval system from a three-year approval cycle back to annual reviews. Companies must now reapply for production quotas every year. Delays in approval or reductions in quotas could lead to raw material shortages and production shutdowns, creating greater uncertainty for long-term procurement, expansion plans, and investment decisions.
3:48 Experts following developments in Southeast Asia point out that three recent events surrounding the challenges faced by Chinese companies in Indonesia deserve particular attention. In May, the China Chamber of Commerce in Indonesia sent a letter directly to Indonesian President Subianto with a copy sent to the Chinese Embassy in Indonesia accusing Indonesia of imposing excessive strict regulations and enforcement measures on foreign invested companies. The letter claimed that some businesses had faced issues including corruption, extortion, forestry related penalties, visa restrictions, rising taxes and fees, and the suspension of major projects. Major Chinese invested companies with extensive operations in
4:33 Indonesia's nickel industry including Tsingshan Holding Group, Huayou Cobalt, CATL's subsidiary BRUMPH are key members of the chamber. Chinese companies warned that sharp reductions in nickel mining quotas combined with a new ore pricing formula and tax policies were rapidly increasing smelting cost and could force companies to reconsider their investments in Indonesia. However, Indonesian Financial Minister Sri Mulyani took a firm stance in an immediate interview saying Indonesia's natural resources are strategic national assets and should first serve the country's interests. Regarding foreign exchange retention rules, he said companies would not need to comply as long as they had not borrowed from Indonesian banks.
5:18 He also accused some Chinese companies of engaging in tax evasion. Indonesia's Energy and Mineral Resources Minister said he had received a letter and would continue communicating with the Chinese Embassy in Indonesia. President Subianto did not directly respond to the letter, but in a speech at the Indonesian Parliament, he said Indonesia is the world's largest producer of palm oil and nickel, yet the prices of these resources are determined by other countries. He called for pricing power over these resources to remain in Indonesia's hands, saying that if international buyers refused to accept Indonesia's prices, the country would rather leave the resources underground for future generations. More importantly, at the same time Indonesia was cutting nickel mining quotas, a series of corruption cases
6:05 involving the nickel industry also came to light. On April 16, just 6 days after taking office, Indonesian state oversight official Susanto was arrested. Prosecutors accused him of accepting a 1.5 billion rupiah bribe from a nickel mining company in exchange for helping the company avoid around 130 billion rupiah in forestry-related payments. He was also accused of leaking confidential investigation reports from the oversight agency to the company in advance. The owner of the mining company involved was later named a suspect as well. As Indonesia tightened controls on nickel quotas, pricing, taxes, and approval procedures for Chinese companies, the government simultaneously exposed corruption cases in the nickel
6:51 sector and arrested officials and corporate figures involved. The move was widely seen as a strong warning. The message to Chinese companies was clear. Indonesia would not accept claims of local official corruption as a bargaining tool, nor allow companies to use such allegations to demand higher quotas, lower taxes, or the return of previous policy benefits. Using local officials, business relationships, and political connections to influence approvals has long been viewed as a common practice among some Chinese companies operating domestically in China. When regulations become stricter, companies often respond by exposing corruption, threatening to withdraw investment, halt production, or create public pressure.
7:37 By this time, the Indonesian government did not back down. Instead, it moved directly to arrest officials, disclose cases publicly, and cut off potential links between businesses and government officials. On November 20th, 2025, the Indonesian Defense Minister led senior military officials, the Attorney General, and financial audit officials to an area near the Morowali Industrial Park in Central Sulawesi, where the military conducted large-scale joint exercises involving all three branches of the armed forces. Indonesia deployed more than 26,000 troops for the drills, which included airborne operations, rapid deployment exercises, airport seizure scenarios, and the defense of key facilities. The
8:22 scale and location of the exercise suggested it was not simply routine training. Instead, it was widely viewed as a warning from the Indonesian government over sovereignty concerns surrounding Chinese investment industrial zones. The Morowali Industrial Park is one of the most important nickel processing and industrial bases for Chinese companies in Indonesia. With large numbers of Chinese businesses, equipment, management personnel, and supply chains moving into the area, the park has gradually developed a relatively closed operating system. The issue that triggered the strongest domestic debate was an airport near the industrial park that is operated by the company itself. The Indonesian Defense Minister had previously accused the airport of lacking permanent Indonesian government officials and direct supervision, describing it as a state
9:09 within a state, and saying it had crossed Indonesian's sovereignty red line. However, not everyone inside the Indonesian government agreed. Deputy Transportation Minister Suntana pushed back against the Defense Minister's remarks, saying the airport had completed all legal procedures and was registered and supervised by the Transportation Ministry. Since the airport only handles domestic flights and is not an international airport, immigration and customs officials are not required to be stationed there. The response showed that Indonesia's civilian government agencies were attempting to frame the issue as an administrative matter, rather than allowing it to escalate into a diplomatic or military confrontation. Nevertheless, even if the airport is legally compliant, the military's strong reaction reflects growing concerns in
9:55 Indonesian society over what it sees as expanding Chinese influence. Indonesia's real concern is not simply whether one airport meets regulations, but whether foreign investment can create close systems of control over strategically important resources. On February 20th, Indonesia and the United States signed a reciprocal trade agreement. Under the deal, the United States reduced tariffs on Indonesian goods from 32% to 19%, giving Indonesian exports better access to the American market. In return, Indonesia agreed to further open its critical mineral sectors, including nickel, bauxite, and rare earths to US investment, allowing American companies to participate more deeply in resource extraction, processing, and downstream
10:40 industries. The significance of this agreement goes far beyond a normal trade negotiation. For years, Chinese companies have used capital, equipment, and processing technology to gain a dominant position in Indonesia's nickel industry, transforming industrial parks such as Morowali into major Belt and Road Initiative hubs in Southeast Asia. Now, as Indonesia cuts mining quotas for Chinese companies, raising taxes and fees, strengthens approval procedures, and tightens financial controls, it's simultaneously opening its critical mineral sector to US investment. In practice, Indonesia is beginning to redistribute power across the industrial supply chain. In other words, Indonesia no longer wants to rely on China for its nickel supply chain indefinitely.
11:25 Instead, it's using access to the US market, American capital, and political support to reduce its dependence on Chinese investment. The United States gains access to critical minerals and an entry point into clean energy supply chains, while Indonesia gains tariff benefits, alternative sources of investment, and greater leverage in dealing with potential Chinese investment withdrawals. It's not only a trade agreement, but also a sign that Indonesia's position in the US-China competition has shifted noticeably closer to Washington. Taken together, these three developments may appear unrelated, but they all revolve around one of China's largest overseas investments in Indonesia. The Tsingshan Holding Group's investment in Indonesia's nickel industry and related supply chains. The core of that
12:11 investment is in Morowali Industrial Park. In 2013, Tsingshan partnered with Indonesian company PT Bintang Delapan to develop nickel resources in the region. The two companies began investing in the industrial park in 2014, turning into one of the largest industrial zones in Eastern Indonesia. According to different estimates and public data, Tsingshan and other Chinese-backed investors have poured more than 30 billion US dollars into the park. The industrial zone currently employs more than 80,000 workers. However, because many employees are Chinese nationals, the park has also faced growing criticism from Indonesian society. During the administration of former President Widodo from 2014 to 2024, the period was widely considered a
12:56 golden era for Chinese investment in Indonesia, with Tsingshan becoming one of the most prominent examples of China's expanding economic influence in the country. However, all this began to change after President Subianto, who is a former military officer, came to power. President Subianto spent much of his career in Indonesia's army special forces and served as commander. In March 1998, he was appointed commander of the army strategic reserve command. Both Indonesia's elite special forces and its most heavily equipped strategic reserve forces had previously been under Prabowo's leadership. Meanwhile, the current defense minister was once Prabowo's deputy in the special forces and remains one of his most important political allies. So, why did the
13:41 defense minister choose to hold a joint military exercise near the Morowali Industrial Park? He could have simply consulted his cabinet colleagues at the transportation ministry to verify whether the industrial park's airport was operating legally. Instead, he bypassed internal government coordination and directly mobilized the military. The question is, what was his real intention? Some reports said that former Indonesian Coordinating Minister for Maritime and Investment Affairs told the media on December 1st, 2025 that the decision to approve the airport at Morowali Industrial Park was made around 2018 after discussions with cabinet officials. There have also been long-standing rumors in Indonesian business circles about the close ties between the Coordinating Minister for Maritime and Investment Affairs and PT
14:28 Bintang Delapan, the Indonesian partner of Tsingshan. Observers believe that the stance taken by the Coordinating Minister and President Prabowo represents the beginning of a formal effort to distance the current administration from the previous government's connections with the Chinese interests. In addition, the Coordinating Minister suggested to the media in September 2025 that Indonesia might purchase China's J-10 fighter jets, but the plan later disappeared. Many observers believe Indonesia's Defense Ministry never had a genuine procurement plan for the J-10, and that the announcement was mainly a negotiating tactic aimed at pressuring France to lower prices. Indonesia later confirmed the purchase of French Rafale fighter jets. Then on June 3rd, Indonesian media reported that the
15:14 Coordinating Minister had agreed to a request from the US Department of Defense to transform Kertajati Airport in West Java into a regional maintenance and repair hub for US C-130 Hercules transport aircraft. The move was seen as effectively opening the door for a greater US military presence in Indonesia. Experts concluded that based on these developments, the former golden era for Chinese invested companies in Indonesia has indeed come to an end. That is also why reports claiming that Chinese companies dismantled an entire production line and removed it within just 3 weeks appears so dramatic and emotional. Rather than representing a confident withdrawal, the move may reflect a desperate response after the previous business model stopped working.
16:00 Equipment can be removed, but mineral resources cannot be taken away. The more urgently companies withdraw, the more it suggests that Indonesia's decision to tighten control over strategic resources may already be irreversible. Indonesia's willingness to withstand pressure from a possible Chinese investment withdrawal is also based on another important factor. Indian capital is preparing to fill the gap, and Jakarta believes Chinese investment is not irreplaceable. At the beginning of this year, India's Ministry of Steel and Indonesia's Ministry of Energy and Mineral Resources began multiple rounds of discussions. India expressed interest in investing in Indonesia's downstream metal processing industry. Indonesian officials said the discussions covered steel, aluminum, copper, and other metal processing
16:45 projects with plans to establish future cooperation mechanisms between governments and companies. The move shows that India is not only seeking access to Indonesian mineral resources, but also wants to participate directly in local processing industries. Indonesia has also been actively diversifying its sources of investment. Public information shows that investors in the Weda Bay Industrial Park now include companies from China, Indonesia, France, Australia, India, and South Korea. Indonesia has also promoted battery precursor projects to Australian companies and held discussions with European investors on nickel mining and downstream cooperation. This suggests that Jakarta's real strategy is not to drive out all foreign investment, but to reduce its dependence on Chinese capital, technology, and market
17:31 channels. It's also worth noting that Indonesia and the Philippines are advancing a nickel quarter initiative aiming to combine Philippine upstream nickel resources with Indonesia's existing processing capabilities. The goal is to allow Southeast Asian resource-producing countries to gain greater control over pricing power and industrial profits. The two countries have proposed investments targeting 47.36 billion dollars and aim to create around 180,000 jobs by 2030. Indonesia and the Philippines are currently the world's largest and second largest nickel ore producers. If they successfully integrate mineral supply, refining capability, and export channels, they could create a regional nickel supply chain with significant pricing influence. From a broader
18:16 regional perspective, the high-profile withdrawal of Chinese companies is not an isolated incident. Instead, it reflects a wider trend among Southeast Asian resource-producing countries seeking to reduce dependence on Chinese capital, technology, and markets. Although each country is taking different approaches, the focus is becoming increasingly similar: raising taxes and fees, reviewing major projects, reclaiming pricing power, attracting alternative sources of capital, and reducing Chinese control over strategic resources and infrastructure. Many of the mines, industrial parks, ports, and transportation networks now being reassessed are precisely the key nodes of China's massive Belt and Road Initiative investments. As 2026 progresses, China's flagship overseas expansion project, the Belt and Road
19:01 Initiative, may be entering an accelerated phase of decline. >> Mhm.
