Indonesia rare earth development moved from policy ambition to institutional action in 2025–26, with President Prabowo Subianto establishing a dedicated Mineral Industry Agency, launching a new state mining enterprise, and identifying eight high-potential mining blocks across Kalimantan, Sulawesi, and the Bangka Belitung islands.
Indonesia Rare Earth: Eight Blocks and a New State Miner
In February 2026, Mineral Industry Agency Chair Brian Yuliarto told members of parliament that eight mining blocks carrying significant rare earth element (REE) potential had been formally identified. The blocks span Kalimantan, Sulawesi, and the Bangka Belitung islands — a region historically associated with tin extraction. Yuliarto noted the blocks also contain tungsten, tantalum, and antimony, minerals with direct relevance to the defence industry.
The agency declined to publish reserve estimates at the time, describing the potential as “promising enough to compete with other countries.” Two pilot research projects are planned for Mamuju, West Sulawesi, to run in parallel with initial mining exploration activities.
The state-owned enterprise assigned to develop these blocks is Perminas (Perusahaan Mineral Nasional), established under the direction of Indonesia’s sovereign wealth fund Danantara. Perminas is exclusively tasked with rare earth mining and extraction, a remit that distinguishes it from Indonesia’s broader mining SOE landscape dominated by nickel and coal operators.
Monazite from Tin Slag: Indonesia’s Structural Advantage
Indonesia’s REE opportunity is structurally different from most emerging producers. The country is the world’s largest exporter of tin, and monazite — a phosphate mineral carrying neodymium, praseodymium, lanthanum, and cerium — occurs as a by-product of alluvial tin mining in Bangka Belitung. State tin miner PT Timah is running pilot processing projects in West Bangka and is in active negotiations with international technology suppliers including LCM, SRE, and SREC to establish domestic separation capability.
The by-product pathway lowers exploration risk significantly. Unlike hard-rock REE projects requiring greenfield capex, monazite recovery can be integrated into existing tin processing infrastructure. The constraint is downstream: Indonesia has no commercial rare earth separation or refining capacity, and without it, monazite concentrate risks flowing to Chinese smelters — the same processing bottleneck that has limited other aspiring REE producers.
For context on why processing dependency remains the defining challenge for non-Chinese producers, see our analysis of the top rare earth supply chain risks.
Processing Gap and the China Dependency Problem
China processes approximately 85–90% of global rare earth output, including material sourced from outside its borders. Indonesia’s government has been explicit that it intends to develop a full domestic value chain — including permanent magnet manufacturing — but this ambition runs directly into a technology and capital constraint that no Southeast Asian government has yet resolved.
PT Timah’s technology negotiations reflect the difficulty. Separation technology for mixed rare earth concentrates requires solvent extraction infrastructure, specialist chemical inputs, and operational expertise that took China decades to develop. Western technology licensors capable of filling this gap — including those PT Timah is reportedly in talks with — face parallel demand from Australia, Canada, and the United States, all of which are further advanced in their processing buildout.
The geopolitical context amplifies the urgency. China’s 2023–26 export control regime on gallium, germanium, and — from April 2025 — seven heavy rare earth elements and compounds has pushed Western governments and industrial buyers to accelerate non-Chinese supply chains. Indonesia’s monazite resources, if separable domestically, would address the light rare earth gap (Nd, Pr, La, Ce) rather than the heavy REE shortage that has attracted the most Western government attention. See our full briefing on China’s rare earth export controls for current policy detail.
International Partnerships: Gabon MoU and Technology Sourcing
Perminas has moved quickly on international deal-making. The enterprise signed a memorandum of understanding with Gabon’s New Energy Metals Holdings Ltd (NEM) to evaluate extraction of the Maboumine niobium and REE deposit in Gabon, with the stated intention of feeding downstream magnet manufacturing inside Indonesia. The MoU signals that Indonesia is willing to source feedstock internationally rather than wait for domestic production to scale.
Malaysia and South Korea have also been cited in early-stage discussions around technology transfer and processing collaboration, consistent with Indonesia’s broader industrial policy under Prabowo of using critical minerals as leverage for technology acquisition rather than raw material export.
Indonesia in the Global REE Producing Landscape
Indonesia does not currently appear in USGS data as a significant REE producer — its output is unquantified at the commercial scale. By contrast, the top rare earth producing countries by volume are dominated by China (240,000 tonnes REO in 2024 per USGS estimates), the United States, and Australia. Indonesia’s entry into ranked production is a medium-term prospect contingent on resolving the processing infrastructure deficit.
The neodymium and praseodymium content of Bangka Belitung monazite is commercially meaningful — NdPr oxides from monazite feedstocks have been processed successfully by operators including Energy Fuels in the United States, which accepts monazite concentrate from Chemours’ mineral sands operations. Current neodymium prices sit at $124.87/kg domestic China (SMM, April 2026), up 6.5% month-on-month, providing the market signal that would underpin investment in Indonesian processing capacity if the technology partnerships close.
Key Risks and Timelines
Environmental liability is material. REE extraction from monazite involves thorium and uranium by-products, both radioactive, requiring licensed handling and waste disposal infrastructure that Indonesia has not yet built at industrial scale. This is not unique to Indonesia — it has been the principal constraint on monazite processing in multiple jurisdictions — but it adds regulatory complexity and capital cost to any commercial project.
Timelines remain vague at the government level. The Mineral Industry Agency has committed to launching the Mamuju pilot projects “in the near future” without specifying start dates or projected throughput. Perminas, as a newly established SOE, has no operational track record. Indonesia’s REE story in 2026 is a credible strategic build with genuine resource foundations — but it is early-stage, and investors should treat all production timelines as indicative rather than committed.
This article is for informational purposes only and does not constitute investment advice. Prices are subject to change without notice.
What rare earth elements does Indonesia produce?
Indonesia does not yet have commercial-scale rare earth production, but its Bangka Belitung islands generate monazite as a by-product of tin mining. Monazite contains neodymium, praseodymium, lanthanum, and cerium. The government is developing processing capability to extract these elements domestically rather than exporting concentrate to Chinese refiners.
What is Perminas and what does it do?
Perminas (Perusahaan Mineral Nasional) is a state-owned enterprise established in 2025 under Indonesia’s sovereign wealth fund Danantara. It is exclusively mandated to develop Indonesia’s rare earth mining and extraction sector, and will operate the eight mining blocks identified by the Mineral Industry Agency in early 2026.
Why is Indonesia’s tin industry relevant to rare earths?
Indonesia is the world’s largest exporter of tin. Monazite, a rare earth phosphate mineral, occurs as an alluvial by-product of tin processing in the Bangka Belitung islands. State miner PT Timah is running pilot projects to recover and separate rare earth elements from this by-product stream, which reduces exploration risk compared to greenfield hard-rock projects.
What is blocking Indonesia’s rare earth ambitions?
The primary constraint is processing infrastructure. Indonesia has no commercial rare earth separation or refining capacity. Without domestic processing, monazite concentrate would need to be exported to Chinese smelters — replicating the supply chain dependency the government is trying to break. PT Timah is negotiating with international technology suppliers including LCM, SRE, and SREC, but no commercial agreements have been confirmed.
How significant could Indonesia become as a rare earth producer?
Indonesia has genuine resource foundations — the USGS does not currently quantify Indonesian REE output at commercial scale, but monazite resources in Bangka Belitung and potential hard-rock deposits in Sulawesi and Kalimantan are material. The government’s target of building a full value chain including permanent magnet manufacturing is ambitious. Commercial production at scale is a medium-term prospect at best, contingent on resolving the processing technology and environmental licensing gaps.
