China’s battery materials giant GEM has signed a head of agreement with Indonesia’s sovereign wealth fund Danantara to build a nickel and recycling hub.
The agreement, confirmed by Danantara investment chief Pandu Sjahrir on Tuesday, marks the fund’s first step into the nickel sector.
“There is a head of agreement that we just signed today with GEM in China … essentially creating a green industrial estate,” Pandu said in an interview.
Danantara CEO Rosan Roeslani, who is currently visiting GEM in China, called the partnership a step toward circular industrial links.
“Our visit to GEM, a pioneer of urban mining in China, is an important step in strengthening Danantara’s strategy to build a circular economy in Indonesia,” Roeslani wrote on social media.
The initiative will bring together GEM, South Korea’s EcoPro, PT Vale Indonesia, and Merdeka Copper Gold. Danantara declined to provide a timetable for the project, and the companies did not respond to requests for comment.
The project ties one of China’s leading battery-materials firms more directly to Indonesia’s rapidly expanding electric-vehicle (EV) industry.
For Jakarta, nickel is central to industrial ambitions. The country, already the world’s top nickel producer (2.2 million tonnes in 2024, according to the U.S. Geological Survey), aims to move beyond raw ore exports toward refining and battery assembly.
Danantara’s Pivot: From Assets to Industry
Launched in February 2025, Danantara manages state-owned assets totaling more than $900 billion. Its mission is to consolidate government stakes and channel investment into strategic industries.
This year, the fund manages $8.3 billion, sourced from state-owned company dividends, Patriot bonds, and a $10 billion syndicated loan.
The Patriot bonds, carrying a 2% coupon, have drawn interest from Indonesia’s business elite. Pandu described them as partly symbolic, urging the private sector to “stand together to contribute to our progress.” The fund aims to raise 50 trillion rupiah by October 2025.
Danantara was appointed to manage WTE projects (government assignment) and is considering offshore investments (Hajj lodging; US upstream Oil & Gas).
The move into nickel positions the fund in one of Indonesia’s most politically charged industrial sectors.
China’s GEM Operations and Recycling Reach
GEM already runs a nickel-processing facility in Morowali, Central Sulawesi, through a joint venture with China’s Tsingshan, CATL’s recycling unit Brunp, South Korea’s EcoPro, and Japan’s Hanwa.
The plant converts low-grade nickel ore into mixed hydroxide precipitate (MHP), a precursor for battery cathodes.
The company also recycles over 30 rare materials, including cobalt, lithium, copper, and tungsten, and handles more than 10% of China’s electronic waste, according to corporate reports.
GEM’s “urban mining” approach recovers materials and reintegrates them into battery supply chains.
Green Industrial Park and Policy Backing
The North Kalimantan hub will form part of the Indonesia Green Industrial Park (IGIP), Jakarta’s flagship for sustainable industry. GEM initially planned a $2 billion investment, with total outlays projected to reach $8 billion as facilities expand.
Danantara has the authority to streamline waste-to-energy projects, cutting through layers of bureaucracy.
Coordinating Minister for Food Affairs Zulkifli Hasan said on Monday that contracts will be handled directly between the fund, the state utility PLN, and the energy ministry. “This should shorten decision-making timelines,” he added.
Strategic implications
Chinese firms already control a substantial portion of Indonesia’s downstream nickel capacity. GEM’s recycling network spans dozens of rare materials and feeds Southeast Asia’s battery supply chains.
Western companies, by contrast, have largely stayed on the sidelines, with some abandoning projects due to regulatory, environmental, or social concerns.
For Indonesia: The partnership brings technology transfer, jobs, and higher-value industrial activity. It also deepens dependence on Chinese investment and market access, making diversification more challenging.
For China: The Kalimantan hub strengthens supply and recycling links that feed its battery ecosystem. For global markets, reducing reliance on Sino-Indonesian supply chains will require sustained investment and coordinated policy.
The GEM–Danantara deal illustrates Jakarta’s challenge: building domestic industrial capacity while managing the influence of a dominant foreign partner in a politically and economically sensitive sector.
