Saudi Arabia should rethink its mining investments in Indonesia, and invest in renewables instead

In an era when the world must transition swiftly towards a green economy, Saudi Arabia’s decision to double down on investments in Indonesia’s mining sector seems less like strategic foresight and more like a misstep from a bygone industrial playbook.

This week, Saudi Arabia’s Minister of Industry and Mineral Resources, Bandar Al-Khorayef, led a high-level delegation to Jakarta, signalling the Kingdom’s growing interest in Indonesia’s mineral wealth, especially nickel, a critical input for electric vehicle (EV) batteries. Al-Khorayef held talks with senior Indonesian officials and executives from major players like PT Vale Indonesia and MIND ID, exploring joint ventures, downstream industrial projects and integrated supply chains linking Indonesia, Africa and the Middle East.

However, Riyadh’s growing appetite for Indonesia’s minerals is at odds with its own aspirations under Vision 2030, the Kingdom’s bold initiative to diversify its economy away from fossil fuels. Saudi Arabia has a once-in-a-generation opportunity to lead the green transition, not just by securing supply chains for clean technologies, but also by becoming a central node in their production. Chasing raw materials in environmentally fragile regions like Indonesia, rather than building clean-tech partnerships, risks undermining the very foundation of this vision.

Indonesia is no passive actor in this equation. With mineral fuel exports reaching $67 billion last year and an ambitious target to raise its global exports to $405bn by 2029, Jakarta sees strategic resource extraction as a shortcut to economic growth. But this model, already burdened by environmental degradation, social unrest and poor governance in extractive regions, is ill-suited for sustainable development, especially in a country as ecologically sensitive as Indonesia.

Saudi Arabia should not ignore the cautionary tale written in Indonesia’s rainforests and riverbeds. The expansion of nickel mining — particularly for EV batteries — has been marred by deforestation, water pollution and displacement of local communities. In Sulawesi, where Vale Indonesia operates, local communities have raised the alarm about declining livelihoods and environmental damage. Jakarta’s downstream processing push, aimed at maximising mineral value within its borders, has often prioritised short-term export gains over long-term environmental and social sustainability.

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These are not just Indonesia’s domestic concerns. Saudi Arabia, as an investor and partner, bears a degree of responsibility for the consequences of its capital. Its participation in the mining boom cannot be decoupled from the ecological footprint that follows. Investing in extraction while touting a green transition is a contradiction that cannot hold indefinitely.

More importantly, it is a missed opportunity.

Rather than extracting more raw materials, Saudi Arabia should focus on strengthening its existing partnerships with Indonesia in renewable energy and technology. The archipelago’s vast solar and geothermal potential remains vastly underutilised, as does its human capital in green innovation. Cooperation in these areas would better align with Vision 2030’s core goals: building a knowledge-based economy, fostering high-tech industries and emerging as a global leader in sustainable development.

There are already signs of progress in renewable energy cooperation between Indonesia and Saudi Arabia. In December 2023, Saudi’s ACWA Power signed an agreement with Indonesia’s state-owned electricity provider PLN and fertiliser producer Pupuk Indonesia to develop the country’s largest green hydrogen facility. The Garuda Hidrogen Hijau (GH2) Project, located in North Sumatra, will be powered by 600 MW of solar and wind energy and is expected to produce 150,000 tonnes of green ammonia annually, with commercial operations slated for 2026.

Furthermore, ACWA Power has signed a Memorandum of Understanding with PLN to explore energy storage solutions and further green hydrogen initiatives in Indonesia. These collaborations exemplify the strengthening ties between Saudi Arabia and Indonesia in pursuing sustainable energy solutions.

By focusing on these sectors, both countries can foster innovation, create jobs, and build resilient economies that align with their sustainability goals. Such collaboration would not only diversify their energy portfolios but also position them as leading actors in the global transition to clean energy.

The geopolitical context adds urgency to this recalibration.

As the US under President Donald Trump reimposes reciprocal tariffs and global supply chains strain under rising protectionism, Indonesia and Saudi Arabia must hedge against economic volatility by building resilient, future-oriented partnerships. Green energy is not just an ecological imperative; it is an economic insurance policy.

Moreover, focusing on renewables would position both Indonesia and Saudi Arabia as champions of South-South cooperation in the climate age. Their collaboration could pioneer models of green industrialisation that speak to the Global South’s priorities: equitable development, resource sovereignty and energy justice.

The stakes are high. Saudi Arabia’s current real investment in Indonesia remains modest, with just $23.6 million across 437 projects in 2024. That number is expected to grow, and the choice of sectors will send a clear signal about the Kingdom’s global intent. Will it be seen as a 21st-century innovator or as a 20th-century extractor with a green veneer?

To be clear, this is not a call for disengagement. Saudi Arabia and Indonesia have much to gain from deepening their ties. But that future must not be built on the old logic of resource plunder. It must be built on mutual respect, sustainability and shared innovation.

The mining sector may offer tempting short-term returns. But in a world inching ever closer to climate catastrophe, those returns come at a high cost. Riyadh should resist the allure of Indonesia’s mineral wealth and instead invest in what will truly power the future: clean energy, knowledge economies and sustainable industrial ecosystems.

The window is still open. The question is whether Saudi Arabia will go through it, or dig deeper into the past.

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