Indonesia is tightening state control over its nickel industry, seizing more than 4 million hectares of mining and plantation sites as the country grapples with shifting global demand for critical minerals. The crackdown targets what authorities call illegal exploitation, with fines totaling $1.7 billion already levied.

Jakarta's move comes as the nickel market evolves away from the heavy reliance that once fueled Indonesia's electric-vehicle ambitions. Chinese EV makers are increasingly shifting to iron-based battery chemistries that use far less nickel, undermining the economic rationale for massive mining expansion. The country's share of global nickel supply jumped to 60% in 2024 from 31.5% in 2020 after Indonesia banned raw ore exports in 2020.

Environmental concerns compound the industry's challenges. Mining has driven the loss of 370,000 hectares of Indonesian forests between 2001 and 2020, with nickel smelters relying heavily on coal power. Major producers emitted about 15 million metric tons of greenhouse gases in 2023. As Indonesia attempts to balance relations between the US and China while courting investment, analysts warn that uncertainty over land seizures and shifting market dynamics could deter future capital commitments to the sector.