Input Security and Industrial Vulnerability: The Impact of U.S.–Iran Tensions on Indonesia’s Nickel Industry

Abstract

This study examines how geopolitical tensions between the United States and Iran affect Indonesia’s nickel industrialization by disrupting sulfur supply chains linked to the Strait of Hormuz. While existing research focuses primarily on energy markets, the implications for industrial input dependencies remain underexplored. Using a qualitative analytical approach that combines value chain analysis, geopolitical risk assessment, and scenario-based reasoning, the study traces how external shocks propagate through intermediate external shocks propagate through intermediate input constraints into domestic industrial systems. The findings show that High Pressure Acid Leach (HPAL) technology—critical for producing battery-grade nickel—is structurally dependent on sulfur, a largely imported and non-substitutable input sourced from geopolitically sensitive regions. This dependence exposes Indonesia’s nickel industry to chokepoint risks, where supply disruptions increase costs, compress margins, and constrain production. The study advances the concept of input security, demonstrating that industrial upgrading does not eliminate vulnerability but reconfigures it through new external dependencies. It highlights the need for supply diversification, domestic capacity development, and proactive geoeconomic strategies to strengthen industrial resilience.