Indonesia’s Nickel Dominance: Economic Growth and Environmental Challenges

Jakarta, Jakarta — The world’s largest nickel producer, Indonesia, must manage its global trade strategies skillfully while also addressing domestic environmental concerns. The Indonesian government’s ban on raw nickel ore exports in 2020 has led to significant investment in downstream processing industries, making the industry a cornerstone of Indonesia’s economic growth.

In 2022, the mining sector contributed 9.2% to GDP, up from 4.3% in 2020, with nickel making a significant contribution. The government’s aggressive promotion of downstream processing has boosted export revenues and created significant local economic benefits, including job creation. Indonesia’s nickel reserves account for nearly 30% of global supply, giving the country a strategic advantage amid the global shift to green energy.

However, large-scale mining activities have negative environmental impacts, including deforestation, biodiversity loss and pollution. Local communities in mining areas report health problems and ecological damage. To address these, Indonesia needs to enforce stricter environmental regulations and implement sustainable mining practices that incorporate local community input. The country’s geopolitical positioning also poses challenges, with trade disputes and international competition for nickel resources complicating export strategies and diplomatic relations.

(With input from agencies.)