Danantara plans nickel processing hub with Chinese company

Indonesia’s sovereign wealth fund Danantara has signed a preliminary head of agreement with Chinese battery recycler GEM to develop a potential nickel processing hub in Indonesia.

The project, which will involve South Korea’s EcoPro and nickel miners Vale Indonesia and Merdeka Copper Gold, marks Danantara’s first move into the country’s nickel sector.

Indonesia is the world’s top nickel producer, and the metal is a key material for EV batteries.

Danantara will manage about US$8.3 billion for investment in 2025, with funds sourced from state-owned company dividends, sales of “Patriot bonds” to local firms, and a US$10 billion syndicated bank loan.

The fund aims to raise around 50 trillion rupiah (around US$3 billion) through Patriot bonds by October.

Launched in February 2025, Danantara oversees all Indonesian government-owned companies with combined assets exceeding US$900 billion.

The fund is also considering investments in Hajj lodging in Saudi Arabia and upstream oil and gas projects in the United States.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Indonesia’s decade-long push for domestic nickel processing creates investment opportunities

The Danantara-GEM partnership represents the latest phase in Indonesia’s persistent strategy to move beyond raw material exports that began over a decade ago.

Indonesia first introduced mining laws in 2009 that banned raw mineral ore exports starting in January 2014, justifying the move as achieving “economic sovereignty” rather than remaining a “nation of slaves” selling cheap commodities1.

While the initial export ban cost Indonesia approximately $4 billion in export revenues in the first year and was partially reversed in 2017 due to economic pressures, it eventually attracted billions in Chinese investment for downstream processing1.

The government reinforced this strategy in 2019 by banning exports of low-grade nickel below 1.7% Ni content effective January 2020, two years ahead of schedule2.

This regulatory persistence has created the foundation for projects like the Danantara-GEM hub, as Indonesia now operates 11 smelters with plans for 25 more2.