Several Chinese investors are currently exploring investment opportunities in Indonesia’s downstream projects, including nickel and coal processing. One project attracting Chinese interest is coal conversion into dimethyl ether (DME), intended as a substitute for liquefied petroleum gas (LPG). The project had previously stalled after U.S.-based Air Products & Chemical Inc (APCI) withdrew. Now, President Prabowo Subianto’s administration is renewing its push to revive the development.

Initially, Air Products committed to two national strategic downstream projects, one of which was coal gasification into DME in Muara Enim, South Sumatra, in partnership with PT Bukit Asam Tbk. (PTBA) and PT Pertamina (Persero). Recently, PTBA President Director Arsal Ismail stated the company has approached several Chinese firms to replace Air Products as a partner in the DME project. Companies explored include CNCEC, CCESCC, Huayi, Wanhua, Baotailong, Shuangyashan, and ECEC. Of these, only ECEC has expressed interest in becoming an investor, albeit not yet committing to a full investment scheme. “So far, only ECEC has shown interest as an investment partner, though not for full investment,” said Arsal during a hearing with Commission XII on Monday (May 5, 2025).

According to PTBA’s presentation at the hearing, ECEC submitted a preliminary proposal for the coal-to-DME project in November 2024. While discussions continue, PTBA is also progressing with project preparations. As of now, they have acquired 198 hectares — 97% of the total 203 hectares required. “This demonstrates our readiness to implement this project. We are also actively coordinating with key stakeholders such as the Downstream Task Force, State Secretariat, Ministry of Industry, and other relevant agencies to secure policy support and direction,” Arsal added.

China’s Growing Hold on Nickel Downstream Projects

In addition to DME, Chinese investors are taking a lead in downstream nickel development for electric vehicle (EV) battery production. The Indonesian government has recently appointed Zhejiang Huayou Cobalt Co as a strategic partner in a major battery supply chain project. Huayou replaces a South Korean consortium led by LG Energy Solution, which initially planned to invest US$8.6 billion (around Rp145 trillion) in the Titan Project.

Huayou’s appointment strengthens China’s dominance in Indonesia’s nickel downstream industry. Most domestic nickel smelters are currently controlled by major Chinese firms like Tsingshan Group and Jiangsu Delong Nickel Industry Co. Furthermore, China’s top battery company, Contemporary Amperex Technology Co Ltd. (CATL), has committed to investing in a battery supply chain project known as the Dragon Project. Through its subsidiary CBL International Development Pte Ltd, CATL formed a joint venture with Indonesia Battery Corporation (IBC) to build a battery cell plant with a 15-gigawatt hour (GWh) annual capacity. The investment totals US$1.18 billion or approximately Rp19.13 trillion.

Minister of Investment and Downstreaming/Head of BKPM Rosan P. Roeslani stated that the government chose Huayou due to its strong interest and extensive track record in Indonesia. According to Rosan, Huayou has already invested US$8.8 billion or around Rp147 trillion in Indonesia. “Huayou’s total investment in Indonesia has already reached US$8.8 billion. They also projected an additional potential investment of up to US$20 billion,” Rosan told reporters on Tuesday (April 29, 2025). Huayou is currently finalizing plans for this new project, with a detailed announcement expected in the third week of May 2025.

Besides taking over from LG, Huayou also plans to develop an industrial zone in Pomala, Southeast Sulawesi, similar to Morowali and Weda Bay. “They’ve studied it and want to invest, including developing their own industrial cluster. In Weda Bay, they’re only minority shareholders, but now they want to create their own,” Rosan explained.

Rosan added that building an industrial zone like Morowali or Weda Bay requires massive investment. “Not only Huayou, I’ve also met with other firms interested in building similar parks, and they could bring in investment from other countries as well,” he said.

Although working with Huayou, the government remains open to investments from any country. Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, revealed that a new major investor will join Huayou in the battery project. He said the prospective partner is one of the world’s top seven companies. “We’ll announce it later. This is a top-7 global company. We wouldn’t partner with an unproven firm. All candidates have been vetted,” Bahlil stated at the ESDM Ministry on Monday (April 28, 2025). He declined to disclose the investor’s country of origin but emphasized that Indonesia is not limiting partners by nationality. “We’re no longer counting whether it’s China, Arab, Europe, or Korea — if they want to invest in Indonesia, we welcome them,” he concluded.