The nickel shortage threatening EV battery production in 2026 has a deceptive surface appearance of resolution: Indonesia has dramatically expanded nickel production, prices have fallen from their 2022 peak, and the battery industry has moved toward nickel-rich chemistries. Below that surface, the structural dependency problem has not been solved — it has been relocated to a different Chinese-controlled jurisdiction.
Indonesia is now the world’s largest nickel producer. The massive nickel processing complexes built on the island of Sulawesi over the past decade represent one of the largest and fastest industrial buildouts in recent history. They have transformed global nickel supply. They are also substantially owned and operated by Chinese companies, financed by Chinese state capital, and integrated into Chinese battery supply chains from ore processing through cathode material production.
The nickel that goes into an EV battery manufactured in the United States, Europe, or South Korea traces through Indonesian processing operations that are effectively extensions of Chinese industrial capacity. The geographic diversification from China to Indonesia is real in one sense — the ore is processed in a different country. It is illusory in another sense — the processing capacity is controlled by the same state actor.
Craig Tindale’s midstream control thesis, developed in his Financial Sense interview, applies precisely here. The chokepoint is not the mine. It is the processor. And the processor in Indonesia is Chinese. The nickel shortage EV battery problem was not solved by Indonesian production growth. It was papered over by a geographic relocation that leaves the strategic dependency fundamentally intact.
For investors: the nickel story is not over. The battery chemistry evolution toward higher nickel content continues. The strategic dependency on Chinese-controlled Indonesian processing continues. The companies developing nickel processing capacity in Western-aligned jurisdictions — Australia, Canada, Finland — are building genuinely strategic assets, not just mining plays.
The Hedge 