A major announcement emerged from the G20 meeting in South Africa this year: China introduced a global initiative to promote a sustainable “life cycle” for mineral resources.
The proposal emphasizes environmentally responsible mining—from extraction to processing to eventual recycling—and promises to ensure that local populations share in the benefits of their natural wealth.
Nearly 20 countries have already expressed interest, spanning African states to Myanmar, a key supplier of heavy rare earths for China. Analysts see the initiative as a strategic counter to US efforts to build similar mineral partnerships, underscoring how quickly the global race for resources is accelerating.
The scale of China’s overseas investment adds context. In the first half of 2025 alone, Beijing poured record sums into Asia and Africa through its New Silk Road infrastructure program. Kazakhstan received US$12 billion in new funding, attracting fresh attention from both China and the United States because of its mineral riches.
But one of the most consequential arenas for China’s mineral strategy lies further south—Indonesia, home to the world’s largest nickel reserves and a critical pillar of the global electric vehicle supply chain.
Chinese capital has transformed Indonesia’s mineral sector over the past decade. Vast industrial parks have risen in remote coastal regions, where nickel ore is processed into the materials used for modern batteries.
For global readers, it is important to understand the scale of this transformation: a formerly rural district can become, almost overnight, a major node in the global energy transition. These industrial complexes produce metals essential for electric cars, yet rely heavily on coal, creating a contradiction at the heart of “green” mineral production.
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If China’s new initiative is to have real impact, Indonesia will be one of its most important testing grounds. A pivotal step is aligning Chinese financing with Indonesia’s own momentum to improve the environmental performance of the mineral value chain.
This means “greening” Chinese financing—embedding environmental conditions into loans, halting new captive coal power plants that exclusively serve industrial processing zones and helping transition existing coal facilities toward renewable energy sources.
These changes are not technical footnotes; they determine whether the minerals underpinning the global energy transition can be produced in ways consistent with climate goals.
Indonesia is already signaling tighter scrutiny of coal-dependent industrial development. For China, the largest investor in Indonesia’s nickel sector, this shift should prompt a redesign of financing structures, technology deployment and long-term industrial planning. A credible life-cycle approach cannot begin with carbon-intensive inputs.
Equally important is reducing dependence on new mining itself. Indonesia’s recent restrictions on permits for new smelters reflect environmental concerns, overcapacity risks, and a desire to improve governance. Yet the policy also creates an opening for China to invest in an area where it has advanced capability: the recycling of critical minerals.
Rapidly growing cities across Indonesia generate increasing volumes of electronic waste—discarded devices, appliances, and used batteries that contain valuable metals such as nickel, cobalt, and rare earth elements.
Recovering these materials through “urban mining” can significantly reduce the need for new extraction. Unlike traditional mining, urban mining relies on recycling infrastructure rather than digging deeper into forests and mountains.
China has some of the world’s most sophisticated battery-recycling systems. Directing investment toward Indonesia’s recycling sector—including e-waste collection networks, battery recovery plants and metallurgical recycling technologies—would support Beijing’s stated vision of a full mineral life cycle.
It would also align with Indonesia’s smelter restrictions and help meet the world’s fast-rising demand for critical minerals without expanding the environmental footprint.
But perhaps the most delicate aspect of China’s proposal is its promise to ensure that local populations benefit from their country’s natural wealth.
This is especially relevant in Indonesia, where communities hosting mines and smelters have long complained that they carry the environmental and social burdens without receiving a proportionate share of economic gains.
Indonesia has a mechanism known as natural resource profit-sharing, in which regional governments receive a portion of revenue from extractive industries. But the reality is more complicated.
As industrial operations become more efficient and vertically integrated—often under Chinese-linked companies—the official revenue base for calculating local transfers can shrink. In some regions, this has resulted in declining public revenue even as industrial activity intensifies.
For communities experiencing pollution, rising living costs and rapid population inflows, the benefits of development can feel increasingly distant.
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Here is where China could make a meaningful contribution. Beyond corporate social responsibility programs, Beijing can offer technical assistance to Indonesia’s Ministry of Finance and district governments to strengthen community benefit-sharing systems.
This could include improving revenue formulas, supporting environmental rehabilitation funds, and creating mechanisms that ensure communities see tangible improvements in infrastructure, education, and public services. A green life cycle, after all, is not just about cleaner production—it is about economic justice.
As China expands its influence through record investments in Asia and Africa, the credibility of its new sustainability initiative will depend on whether it delivers real change in the places most affected by its resource partnerships. Indonesia offers a chance for Beijing to demonstrate that its G20 pledge is more than geopolitical positioning.
If China uses this initiative to green its financing, accelerate investment in critical-mineral recycling, and help ensure that local communities share in the wealth beneath their feet, it could redefine what resource partnership means in the 21st century. The world is watching and Indonesia’s future may help decide the outcome.
Bhima Yudhistira Adhinegara is executive director of the Jakarta-based Center of Economic and Law Studies (CELIOS) independent research institute. Muhammad Zulfikar Rakhmat is director of CELIOS’ China-Indonesia desk.
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