On June 17, 2026, in Évian, France, the leaders of the Group of Seven (G7) industrialized nations issued a Joint Declaration on Critical Minerals Supply Chain Security. Nickel and lithium were designated as the two pilot minerals for a traceability framework that will soon become the standard among G7 countries. Indonesia—which produced two-thirds of the world’s nickel ore in 2025, accounting for 2.6 out of 3.9 million tons—did not have a seat in that room.
We were mentioned, but we were not invited. This pattern is nothing new in the history of our extractive governance. However, what makes it so crucial this time is the momentum. Amidst the downstreaming (hilirisasi) euphoria, Indonesia’s opportunity to speak from a position of equal sovereignty is wide open, yet simultaneously at risk of slipping away.
For too long, the public and policymakers have constantly asked, “How should Indonesia respond to the G7?” That question, with all due respect, is built on the wrong foundation. A much more fundamental question to test the direction of our transition is: who actually benefits most from this global traceability framework, and who will bear the heaviest burden at the grassroots level?
To answer this, we must dare to untangle three layers of root problems that have long been hidden behind the glitter of export figures.
Illicit Economic Circuits and Fiscal Leakages
Research from the Center of Economic and Law Studies (CELIOS) titled Indonesia’s Nickel: What is Seen and What Remains Buried provides a structural snapshot that slaps our sense of sovereignty. There are strong indications of trade misinvoicing within the nickel industry throughout 2020–2024. The export values reported by exporters in Indonesia are consistently and significantly lower than those recorded by the destination countries.
This discrepancy is not just an accounting anomaly. It is a systemic fiscal leakage that never returns to the people. When the government does not even have a complete view of its own nickel supply chain, how can we negotiate as a sovereign entity in the face of G7 standards? Bringing the downstreaming narrative to the global stage without fixing upstream transparency is equivalent to surrendering the neck of our fiscal sovereignty to foreign entities.
The Captive Coal Paradox and Transnational Capital
On the international stage, Indonesia echoes its commitment to phase down coal through the Just Energy Transition Partnership (JETP). Yet, on our own soil, the capacity of captive coal—coal-fired power plants (PLTU) built specifically to power smelter industrial zones—now surpasses 31 gigawatts (installed and planned). This massive capacity stands entirely outside the national grid (PLN) and evades the radar of JETP commitments.
We can no longer view this narrowly. A July 2026 report by the Centre for Research on Energy and Clean Air (CREA) shows that aluminum downstreaming is now “replicating” the exact same sickness. The projected increase in alumina capacity to 32.5 million tons by 2030 is accompanied by the construction of 9.8 gigawatts of new captive coal. More than three-quarters of the financing for this expansion is backed by Chinese investors, repeating the industrial offshoring pattern of dirty industries previously witnessed in the nickel sector.
This means we are being squeezed from two sides: G7 nations demand green traceability standards, while actual expansion on the ground is controlled by dirty-energy-hungry transnational capital. Consequently, electric vehicle batteries—the proud symbol of the global green transition—are, in reality, forcibly subsidized by the lungs of workers and the living spaces of communities in Morowali, Weda Bay, all the way to Mempawah. This is not an energy transition. This is the localization of emissions to serve the green ambitions of others.
The Illusion of Regional Justice and New Institutional Clothing
Nickel-producing regions bear the direct burden of mass deforestation and increasingly uncontrollable ecological destruction. The expansion of this industry continues to consume natural forests without brakes. Referring to the analysis by the Auriga Nusantara Foundation, we see a consistent pattern. From the loss of 41,406.37 hectares of natural forest within nickel mining concessions in Sulawesi and North Maluku, to the latest findings in the 2025 Indonesia Deforestation Status Report (STADI 2025). This extractive ambition is pushing further east, clearing forests for nickel mining concessions in the Raja Ampat Islands, which contributed to a record spike in deforestation in Papua to 60,337 hectares in just one year.
We are witnessing a transition paradox at the grassroots level: natural forests are destroyed to supply minerals labeled as global “clean energy.” This massive land clearing inflicts irreversible damage on the living spaces of local communities. Unfortunately, because the royalty regime has shifted and tax reporting is not project-based (project-by-project reporting), the share of the Revenue Sharing Fund (DBH) received by these nickel-producing regions is completely disproportionate to the ecological carrying capacity that has been shattered to pieces.
Our institutional response to this chaos remains artificial. Consolidating critical mineral exports through a single-gate scheme like PT Danantara Sumberdaya Indonesia holds a legitimate mandate. However, without a transparent architecture—such as robust Beneficial Ownership disclosures and open contracts—Danantara risks becoming merely “new bureaucratic clothing” to perpetuate old monopolies. Danantara’s decision to finance the Mempawah smelter expansion with 1.25 gigawatts of captive coal, instead of commercially available solar energy, proves that efficiency without accountability is not reform.
Reclaiming the Position of the Subject
The G7 traceability framework will reach our industry, whether we like it or not. The question is no longer whether to reject or accept it, but rather: can we offer a counter-architecture that favors distributive justice?
We can only become a standard-setter, not just a standard-taker, if the government dares to execute three tactical steps: First, comprehensive transparency integration. Fully adopting Extractive Industries Transparency Initiative (EITI) standards, including project-by-project reporting obligations for all smelter entities and captive power, as well as making Beneficial Ownership data public. Second, a fiscal justice audit. Conducting investigative audits into potential trade misinvoicing and reforming the DBH scheme so that affected areas and vulnerable groups have a fiscal cushion to restore ecological damage. Third, a paradigm shift to Rights-Holders. Affected communities, women’s groups, and mining workers must no longer be positioned as mere stakeholders who are only invited for formalistic consultations. They are rights-holders who must possess legal instruments—including Free, Prior and Informed Consent (FPIC)—to intervene in or reject projects that destroy their living spaces.
Follow the money, and we will know who profits from this downstreaming. Follow the decisions, and we will know who actually sits at the table. As long as the voices of local communities and ecological justice lack legal enforcement power, we will continue to transfer old injustices into a new shell called the energy transition.
The Évian Declaration is a blinding mirror. It is high time for Indonesia to stop being a mere showcase for the world’s minerals and start organizing its own supply chain for the safety of its citizens.
Source: Berita baru.co