French Firms Seize Geopolitical Advantage in Indonesia's Nickel Boom: A Strategic Play for Energy Transition and Defense Dominance

The global energy transition and U.S.-China rivalry have turned Indonesia into a geopolitical battleground, where its vast nickel reserves—critical for electric vehicle (EV) batteries—are now central to supply chain security. French firms Eramet and TotalEnergies, alongside strategic partnerships like the Danantara fund, are positioning themselves to capitalize on this shift. While Danone remains absent from these resource plays, Eramet's moves in nickel processing and France's deepening defense ties with Jakarta signal a strategic realignment with profound implications for investors.

The Nickel Nexus: Eramet's Geopolitical Gambit

Eramet's partnership with Indonesia's $20 billion Danantara sovereign wealth fund to acquire stakes in the Weda Bay HPAL plant marks a pivotal moment. This facility, producing 72,000 tonnes of battery-grade nickel annually, sits at the heart of Indonesia's plan to supply 38% of global EV nickel demand by 2030. By aligning with Danantara, Eramet secures a foothold in a supply chain dominated by Chinese firms like Tsingshan, which control 60% of Indonesia's processing capacity.

The deal's success hinges on overcoming two major hurdles: regulatory complexity and technological execution. Indonesia's 51% domestic ownership rule within a decade demands strategic local partnerships, while HPAL's high energy costs ($11,200/tonne) require operational efficiency. Eramet's AMEL® Process, which reduces sulfuric acid use by 18%, is a key differentiator here.

Investors should monitor nickel price volatility ($16,500–$28,000/tonne) and Eramet's share price, which has risen 18% YTD amid Indonesia's resource nationalism push.

Danantara: Weaponizing Sovereign Wealth for Resource Control

As Indonesia's flagship sovereign fund, Danantara's first major bet on the Weda Bay plant signals a bold shift toward “resource sovereignty.” Its $20 billion war chest aims to transform raw material exports into high-value industrial assets, directly countering China's dominance in critical minerals. The fund's alignment with Eramet also aligns with U.S. policies, as Washington grants tariff-free access to Indonesian nickel under the Inflation Reduction Act—a strategic win in the EV battery arms race.

Defense Ties: France's Play for Influence in ASEAN

While EV batteries dominate headlines, France's defense deals with Indonesia underscore a broader geopolitical calculus. President Macron's May 2025 Jakarta visit solidified $8.1 billion in defense contracts, including 42 Rafale jets and submarines. These deals cement France as Indonesia's top Western arms supplier, leveraging Jakarta's need for modernization against regional rivals.

The synergy between Eramet's nickel play and French defense partnerships is clear: both position Indonesia as a linchpin of supply chain resilience. Nickel powers EVs, while advanced weaponry secures strategic interests—a dual play for investors in energy transition and defense tech.

Where Are Danone and TotalEnergies?

Notably absent from these moves are Danone and TotalEnergies. Danone's focus on consumer goods leaves it outside Indonesia's resource boom, while TotalEnergies has shifted priorities to optimizing global investments rather than expanding in Southeast Asia's battery sector. This omission highlights a divergence in French corporate strategy: state-backed Eramet and defense firms are leading the charge, while others lag behind.

Investment Thesis: Play the Indonesian Nickel-Defense Axis

For investors prioritizing energy transition and geopolitical risk mitigation, Eramet and Indonesia's resource plays offer asymmetric upside:
1. Nickel's Strategic Value: Global EV demand will require 1.4 million tonnes of Indonesian nickel by 2030—a 10x increase from 2023.
2. Defense Synergies: France's arms deals create a “halo effect,” attracting further investment in Indonesian infrastructure.
3. Danantara's Leverage: The fund's mandate to retain local ownership ensures long-term control over supply chains, shielding investors from Chinese overreach.

Risks to Monitor

• Regulatory Gridlock: Indonesia's overlapping ministries could delay HPAL upgrades, raising costs.
• LFP Battery Competition: Nickel-free lithium-iron-phosphate (LFP) batteries now claim 45% of EVs, compressing margins.
• Geopolitical Volatility: U.S.-China tensions could disrupt supply chains or trigger sanctions.

Conclusion: Stake a Claim in the Next Supply Chain War

Indonesia's nickel boom and French strategic investments are not just about minerals—they're about securing the infrastructure of the 21st-century economy. For investors seeking long-term growth, Eramet's HPAL partnership and France's defense footprint are dual pillars of a portfolio designed to thrive in a fractured global order. The window to capitalize on Indonesia's resource nationalism is narrowing; act now before the competition does.

Recommendation: Allocate 5–7% of a diversified portfolio to Eramet (EPM FP) and track Indonesian sovereign bonds tied to the Danantara fund.