In a rare move, the Indonesia China Chamber of Commerce has sent a strongly worded joint letter to President Prabowo Subianto, directly criticizing recent nickel policy changes in Indonesia for severely disrupting the operations of Chinese-invested enterprises. The letter explicitly warns that the deteriorating business environment could trigger capital flight. Major industry players such as Tsingshan Group, Huayou Cobalt, and Brunp Recycling, all members of the chamber's board of directors, have collectively voiced their concerns, signaling a full-scale escalation of industrial tensions between the world's largest nickel producer and its core source of investment capital.

A series of policy changes have created comprehensive operational pressures, sharply increasing costs and hindering operations for Chinese companies. Mining quotas have been significantly tightened: the nickel ore mining quota for 2026 has been slashed from 379 million tons to 250 million tons, a reduction exceeding 34%. The quota for the core Weda Bay mining area, where Chinese companies are concentrated, has been more than halved, plummeting from 42 million tons to 12 million tons, a cut of over 70%, pushing raw material supply to the brink of collapse.

Pricing and tax regulations have been drastically increased. A new benchmark price (HPM) formula implemented from April 15th sharply raised the pricing coefficient for low-grade nickel ore from 17% to 30% and included associated metals like cobalt, iron, and chromium in the valuation, directly causing ore prices to surge by 221%. Coupled with increases in royalty fees and the contemplation of export tariffs, corporate compliance costs have risen exponentially.

Financial and operational constraints have been intensified. A foreign exchange retention rule set to take effect in June requires resource companies to mandatorily convert up to 50% of their export revenue into Indonesian Rupiah and deposit it in state-owned banks. Stricter forestry law enforcement, tightened work visa regulations, the suspension of major projects, and accusations of "excessive enforcement and official corruption and extortion" have trapped Chinese companies in a dilemma where "compliance leads to losses, and operations risk violations."

As core forces in the global nickel supply chain, companies like Tsingshan Group, Huayou Cobalt, and Brunp Recycling have cumulatively invested over $14 billion in Indonesia, establishing a complete closed-loop system from mining and smelting to battery materials. They now collectively face severe difficulties.

Huayou Cobalt was forced to suspend 50% of the production capacity at its Huafei nickel-cobalt project starting in May due to costs exceeding viability. This project contributed nearly 10% of the company's net profit last year but has now become a "negative asset."

Tsingshan Group, the largest investor in Indonesia's nickel industry, has seen its core mining area quota slashed by 70%. Its pyrometallurgical smelting capacity faces shutdowns due to raw material shortages, impacting both its stainless steel and new energy materials businesses.

Brunp Recycling is experiencing a disruption in its nickel raw material supply, limiting its production capacity for power battery precursors and posing a serious challenge to the stability of the global supply chain.

The chamber's letter states that under the pressure of multiple policies, the investment confidence of Chinese enterprises has been "severely undermined." It warns that if the Indonesian government does not promptly correct course and improve the business environment, large-scale capital flight may become inevitable, directly impacting Indonesia's strategic positioning as the "global nickel industry leader."

In response to the collective protest from major Chinese investors, the Indonesian government has shown signs of flexibility. On May 11th, the Minister of Energy and Mineral Resources announced a temporary suspension of the planned increases in nickel ore royalties and export taxes, stating a reassessment of the policy formulas to seek a "win-win situation for both government and enterprises." President Prabowo Subianto has also publicly acknowledged complaints from foreign investors about cumbersome approval processes and called for relaxed regulations to attract investment.

In the short term, the policy suspension provides room for de-escalation, but the long-term strategic contest remains unclear. Fundamental conflicts exist between the Indonesian government's fiscal pressures and rising resource nationalism on one side, and the cost control and supply chain security needs of Chinese enterprises on the other.

This joint letter serves as both a "final warning" and a signal of the restructuring of the global nickel industry chain. Chinese companies may accelerate diversification of their supply chains to reduce dependence on Indonesia. Conversely, if Indonesia loses the support of Chinese capital and technology, its goals for nickel industry expansion and increased fiscal revenue may also fail to materialize.