Madagascar’s mining minister says the proposed project was inspired by Morowali Industrial Park.
BEIJING – Chinese companies that helped build Indonesia’s nickel industry into the world’s largest producer are now looking as far afield as Africa for long-term alternatives.
The shift comes as mounting policy pressures test the investment model that has reshaped global supply chains.
As reported by Reuters, Tsingshan Group is considering the development of a major project in Madagascar, according to the country’s Ministry of Mining.
Meanwhile, Lygend Resources is exploring a project in Tanzania and is also considering reviving operations at the Koniambo nickel project in New Caledonia, according to industry sources.
Chinese companies have been the driving force behind the development of smelters and industrial parks that transformed Indonesia into the global growth centre of the nickel industry, a metal used in stainless steel and electric vehicle batteries, following the government’s ban on nickel ore exports in 2020.
Indonesia’s share of global mined nickel production rose to more than 60% in 2025 from around 30% in 2020, according to data from the US Geological Survey (USGS).
Low-cost production backed by Chinese investment created a surplus in the nickel market, depressing prices and forcing higher-cost producers such as Glencore, BHP and Sumitomo to close, suspend operations or seek buyers for their assets.
However, since taking office in late 2024, President Prabowo Subianto has focused on increasing state revenue and spending, including a USD 20 billion free meals programme.
At the end of May, Prabowo announced plans to place exports of coal, palm oil and ferroalloys under more centralised state control.
Although nickel pig iron was later confirmed to be excluded from the policy, the proposal nevertheless raised investor concerns over policy stability.
Even before the announcement, investors had already been unsettled by tighter nickel ore mining quotas, proposed tax increases and a sharp rise in Indonesia’s mineral benchmark prices.
The Chinese Chamber of Commerce in Indonesia also sent a letter to Prabowo warning that the measures could hinder future investment.
“This is clearly negative for the industry,” said Tim Hoff, senior mining analyst at Canaccord.
According to Hoff, additional bureaucracy and increased government control over commodity pricing are likely to affect the scale of future investment.
Foreign direct investment (FDI) into Indonesia fell 6% in 2025 after growing 19% the previous year.
Investment in the mining sector peaked in 2024, while new investment in the base metals processing sector has also stagnated since then.
Madagascar inspired by Morowali
Tsingshan has submitted a multi-billion-dollar proposal to build a mineral-based industrial park in Madagascar focused on several commodities, including nickel.
Madagascar’s Mining Minister Karl Andriamparany said the project was inspired by the Morowali Industrial Park and Weda Bay developments in Indonesia, although it remains under review and has not yet received mining permits.
Meanwhile, Lygend is negotiating to acquire a stake in Tanzania’s Kabanga nickel project from Lifezone Metals.
The project is one of the world’s largest undeveloped nickel sulphide deposits.
In the Pacific region, Lygend has also submitted a proposal to New Caledonia’s state-owned mining group, SMSP, to acquire a stake in the currently idle Koniambo nickel project.
If completed, the investments would mark the first nickel expansion projects by Tsingshan and Lygend outside Indonesia.
Indonesia’s policy changes have tightened nickel supply expectations and pushed prices to their highest levels in two years.
The situation has revived hopes for projects such as Koniambo, which produced more than 28,000 tonnes of nickel at its peak in 2018.
Nevertheless, new projects in Madagascar and Tanzania carry greater risks than those in Indonesia.
Neither country possesses Indonesia’s combination of production scale, infrastructure and access to ore resources.
Madagascar, which is currently under a transitional military government following last year’s coup, only lifted a 16-year moratorium on mining permits in January.
Meanwhile, Tanzania’s Kabanga project requires almost USD 1 billion in investment and approximately six years of development before reaching production capacity of around 50,000 tonnes annually.
The developments suggest that while Indonesia continues to dominate the global nickel industry, growing policy uncertainty is beginning to encourage investors and Chinese companies to pursue diversification opportunities overseas. (DK/ZH)
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