Electric vehicle supply chain in Indonesia shows deep integration

SULAWESI (INDONESIA), MOROWALI, MOROWALI UTARA, KOLAKA, POMALAA, BAHODOPI, SOROWAKO, EAST LUWU, SOUTH SULAWESI, 12 OCTOBER 2026 —

Indonesia’s EV supply chain shows early integration, but Sulawesi’s nickel processing faces sustainability test

Indonesia’s electric vehicle (EV) supply chain is beginning to demonstrate integration from upstream mining to downstream processing, but challenges remain in ensuring local economic benefits and sustainable industrial growth, according to economist Mohammad Faisal of CORE Indonesia.

The development reflects a broader shift in Indonesia’s economic structure, particularly in Sulawesi, where regions like Morowali and Morowali Utara have transformed from agriculture and raw mining to industrial hubs—with over 75% of their economies now supported by processing sectors. However, Faisal warned that the full potential of downstream industries depends on stronger local linkages, workforce development, and sustainable governance.

Faisal highlighted that while upstream nickel mining in Sulawesi has reached high maturity, midstream and downstream activities—such as battery-grade material production—are still evolving. He cited PT Vale Indonesia Tbk, part of the MIND ID Group, as a key player expanding its High Pressure Acid Leach (HPAL) facilities in Pomalaa (Kolaka, Southeast Sulawesi), Morowali, and Sorowako (East Luwu, South Sulawesi). These projects aim to produce Mixed Hydroxide Precipitate (MHP), a critical intermediate for battery supply chains.

Vale’s investments in HPAL technology—linked to projects in Pomalaa, Bahodopi, and Sorowako Limonite—underscore the growing industrial ecosystem connecting mining, processing, and supporting industries.

The economist emphasized that while Sulawesi’s nickel processing is forming a more cohesive supply chain, its long-term success hinges on broader economic inclusion. "The sustainability of this transformation depends not just on investment and production scale, but on how well industrialization creates lasting value for local economies and communities," Faisal said.

He noted that regions like Morowali, once reliant on primary sectors, now face the challenge of ensuring industrial expansion translates into job creation, environmental stewardship, and resilient economic activities.

For Malaysia, Indonesia’s EV supply chain developments carry indirect implications, particularly as both nations compete in regional battery and mineral processing sectors. While Malaysia has its own downstream investments—such as battery manufacturing—Indonesia’s accelerated nickel processing could influence global supply dynamics, potentially affecting raw material costs and trade flows. The next critical phase for Sulawesi will be balancing rapid industrial growth with equitable development, a test case for Indonesia’s broader push toward value-added mineral exports.