JAKARTA - Chinese firms control about 75% of Indonesia's nickel refining capacity, raising concern over supply chain control and environmental risks, Washington-based global security nonprofit C4ADS has said in a report.

According to the report, Indonesia's eight-million metric ton refining capacity was distributed across 33 companies, but ownership tracing showed shareholder overlap, and ultimately Chinese companies controlled about three-quarters of smelting capacityas of 2023.

"As Indonesia aims to use the nickel industry for economic growth, this substantial foreign influence could limit its ability to control and shape the industry for its benefit," said the report, released on Tuesday.

The reliance on Chinese-controlled nickel production also places US and European automakers at a competitive disadvantage in the global EV market amid increasingly restrictive policies against trade with China, the report said. Nickel is a key battery component.

Indonesia's mining ministry did not immediately comment.

An Indonesian official said last year that Chinese companies were approaching Indonesian and South Korean firms for potential partnerships to reduce their stakes in smelters and make their product more accessible to the US market.

President Prabowo Subianto formed a task force to develop the downstream mineral industry with domestic financing to "gradually reduce perception that foreigners got the most benefits," Mining Minister Bahlil Lahadalia said last month.

The C4ADS report found that two Chinese companies, Tsingshan Holding Group and Jiangsu Delong Nickel Industry, accounted for more than 70% of Indonesia's refining capacity as of 2023.

The two were among the earliest investors when Indonesia started a push for domestic processing of nickel ore - a move that has made it the world's dominant producer.

Last year, a court in Central Sulawesi sentenced two workers at Indonesia Tsingshan Stainless Steel to seven months jail for negligence that led to a fire and deaths at a Tsingshan facility in December 2023. In early 2023, two workers were killed in clashes at the PT Gunbuster Nickel Industry smelter in North Morowali owned by Jiangsu Delong Nickel Industry.

Tsingshan's unit Eternal Tsingshan and Jiangsu Delong's joint-venture Obsidian Stainless Steel did not immediately respond to requests for comment. Jiangsu Delong could not immediately be reached for comment.

Tsingshan has been selling stakes in some of its smelters, including an October deal with Indonesian state miner Aneka Tambang for 30% of PT Jiu Long Metal Industry.