Indonesia is poised to repeat its nickel playbook with aluminium: massive Chinese-funded investment is turning the country into a major producer just as the Iran war strains global supply. Goldman Sachs estimates Indonesia will account for 5 per cent of global primary aluminium production by 2030, up from 1 per cent today, and contribute to 40 per cent of global growth in production. The Middle East represents almost 10 per cent of global supply, and disrupted production has pushed prices to highs last seen in 2022 at the start of the war in Ukraine.
The mechanism is regulatory. Indonesia banned bauxite exports in 2023 (bauxite is the ore that, after refining into alumina, becomes aluminium), forcing companies to set up local processing — exactly what happened with nickel, where Indonesia leapt from 6 per cent of global refined nickel in 2015 to 65 per cent last year. At the same time, China imposed a domestic aluminium production cap in 2017, pushing Chinese producers like Shandong Nanshan Aluminium and Tsingshan offshore. Indonesian alumina output rose to 5.9mn tonnes in 2025 from 3.3mn in 2022, according to CRU.
JPMorgan now forecasts the largest primary aluminium deficit since 2000, with global stocks "thin". South32 closed its Mozal smelter in Mozambique last month, and Rio Tinto is considering shutting Tomago in Australia, both citing high power costs. New Indonesian smelters will start to come online from 2027, partly offsetting Gulf losses but reviving fears of medium-term oversupply once the war premium fades. Source: Financial Times, 28 April 2026, William Sandlund, Camilla Hodgson, Edward White and A. Anantha Lakshmi.