By Dr Han Phoumin, Senior Energy Economist: As the world races toward net zero, a new geopolitical frontier is emerging, not over oil, but over critical minerals. Nickel, cobalt, copper, lithium, and rare earths have become indispensable inputs for electric vehicles, solar panels, and semiconductors. Whoever commands their production, processing, and trade will shape the contours of the 21st-century economy.

Indonesia sits squarely at the centre of this transformation. According to the U.S. Geological Survey, Indonesia holds around 55 million metric tons of nickel reserves, about 42% of global reserves, making it the largest globally. The country also ranks amongst the top ten producers of copper and bauxite. No longer content to remain a mere supplier of raw materials, Indonesia has adopted its hilirisasi (downstream industrialisation) policy, banning the export of unprocessed ores, establishing more than thirty smelters, and attracting over US$30 billion in foreign direct investment between 2019 and 2023. Industrial parks such as Morowali and Weda Bay have become symbols of Indonesia’s ambition to build a full battery-manufacturing ecosystem, from mine to electric vehicle assembly.

Yet resource abundance alone is not destiny. Indonesia’s next challenge is to turn mineral wealth into sustainable, rules-based prosperity. Critical minerals are fast becoming “the new oil, ” reshaping global trade and geopolitics. The multilateral trading system, designed in the post-war era, must now adapt to a world where access to minerals determines who commands clean-energy supply chains.

Three imperatives stand out.

First, transparency. Global mineral markets suffer from information asymmetry and price volatility. A WTO- or G20-led “Critical Minerals Data Hub” could help track production, trade restrictions, and stock levels in real time, reducing uncertainty and deterring export hoarding.

Second, sustainability. Indonesia’s rapid industrialisation has sparked environmental, social, and governance (ESG) concerns, from deforestation to coal-powered smelters. To remain competitive in high-value clean-tech markets, Indonesia must align with OECD-based environmental and social standards. Developing a national ESG certification and traceability framework would secure international trust and unlock green-finance flows from partners such as the U.S. EXIM Bank (Export-Import Bank of the United States) and DFC (U.S. International Development Finance Corporation).

Third, diversification. The United States’ Inflation Reduction Act and the Minerals Security Partnership open new avenues for collaboration beyond traditional FTA frameworks. A sectoral “critical minerals compact” between Washington and Jakarta, granting IRA tax-credit equivalency to ESG-compliant Indonesian nickel, would deepen supply-chain resilience while encouraging responsible investment.

To advance these imperatives, Indonesia must position its policies within the broader context of global competition and co-operation. Transparency should extend beyond data disclosure to include adherence to predictable trade and investment rules that discourage resource nationalism while safeguarding national interests. Sustainability must move past compliance-oriented ESG commitments toward measurable transitions—such as renewable-powered smelting, community inclusion, and responsible waste management. Diversification, meanwhile, should reach beyond bilateral ties with the United States and China to embrace partnerships with Japan, Korea, and the European Union through supply-chain co-investment and technology transfer. Embedding these priorities within ASEAN’s Critical Minerals Strategy and aligning them with global initiatives such as the G7’s Partnership for Global Infrastructure and Investment (PGII) would help reposition Indonesia from a resource supplier to a rules-shaper in the emerging green industrial order.

At the regional level, ASEAN can amplify these efforts through an integrated Critical Minerals Strategy linked with the ASEAN Framework for Integrated Semiconductor Supply Chains (AFISS). By connecting mineral, semiconductor, and renewable-energy industries, the region can build a self-reinforcing ecosystem that drives both economic resilience and climate progress.

Indonesia’s critical-minerals moment is therefore more than a national opportunity; it is a test case for how developing economies can climb the value chain while contributing to a fairer, greener global trading order. The choice is clear: compete on extraction alone, or lead through co-operation, transparency, and sustainability.

If managed wisely, Indonesia will not just mine the materials of the clean-energy future, but it will help define the rules that govern them.

This opinion piece was written by Dr Han Phoumin, Senior Energy Economist, ERIA, and has been published in The Jakarta Post. Click here to subscribe to the monthly newsletter.

Disclaimer: The views expressed are purely those of the authors and may not in any circumstances be regarded as stating an official position of the Economic Research Institute for ASEAN and East Asia.