Massive industrial complexes for nickel mining have transformed an Indonesian island long home to fishing villages and school children.

Workers walk near excavators to gather soil containing nickel ore at PT Virtue Dragon Nickel Industry, a nickel processing complex in Central Sulawesi, Indonesia

Workers walk near excavators to gather soil containing nickel ore at PT Virtue Dragon Nickel Industry, a nickel processing complex in Konawe Regency, Central Sulawesi, Indonesia on 29 October 2023. The industrial plants are powering the move to electric vehicles. Credit: Garry Lotulung

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Labota used to be a small Indonesian fishing village on the island of Sulawesi, which sits east of Borneo. It is now a sprawling city centered around the Indonesia Morowali Industrial Park or IMIP, a $15 billion development of 50 factories sprawling across nearly 10,000 acres. It is the world’s epicenter for nickel production.

You can see walls surrounding the industrial complex containing steelworks, coal power plants and manganese processors. It now has its own airport and seaport.

Built as a joint venture between Chinese and Indonesian industrial companies, it is at the heart of Indonesia’s push to supply the electric vehicle market with nickel, a core component of batteries.

Indonesia is blessed with abundant natural resources. After timber, crude oil, coal and palm oil, there is nickel. The world needs renewable energy, in particular batteries that emit far fewer greenhouse gases than oil, gas or coal. One of the key components of batteries is nickel ore.

Indonesia is the world’s largest nickel producer and has 15% of the world’s lateritic nickel resources, the demand for which is currently high due to the manufacture of batteries for electric vehicles.

Hunger for e-cars fuels mining

The International Energy Agency predicts global demand for the metal will grow at least 65% by 2030, and EVs and battery storage are set to take over from stainless steel as the largest end user of nickel by 2040.

The nickel business is concentrated on Sulawesi, in the districts of North Konawe and Morowali, where Chinese company Tsingshan runs IMIP, and in Morosi, where PT Virtue Dragon Nickel Industry and Obsidian Stainless Steel both operate.

While large Chinese companies dominate processing, they are fed cheap ore by hundreds of smaller, mostly Indonesian-owned mines that dot the rainforest.

In just three years, Indonesia has signed more than a dozen deals worth more than $15 billion for battery materials and electric vehicle production with global manufacturers including Hyundai, LG and Foxconn.

On 28 December 2021, Indonesia unveiled a new nickel smelter in North Morowali Regency of Central Sulawesi. It has been equipped to process 13 million tons of nickel ore annually. Indonesian President Joko Widodo said that the new ferronickel-producing smelter is expected to increase the nickel ore’s value by 1400%.

Nickel mining that keeps going and going

Industrialization has been Widodo’s focus throughout his presidency, as he pushes to turn the resource-rich country’s main export commodities from raw minerals to high-value-added products.

In June 2022, at the groundbreaking ceremony for an LG-led consortium’s battery material facility in the Batang Integrated Industrial Park, in Central Java province, Widodo said that Indonesia would become a leading producer of nickel-based products, including electric-vehicle batteries. “This is a golden opportunity to develop a green economy for the future,” he said.

The potential carbon emissions from the expansion of mining operations are significant, considering that the smelting process is highly energy intensive and most smelters in Indonesia are powered by coal.

According to a report by German policy lobby group Rosa-Luxemburg-Stiftung, the nickel-processing factories at IMIP pollute the air by spewing out sulfur dioxide, nitrogen oxides and coal ash — particles that are “finer than beach sand and can be extremely harmful when inhaled.”

Clean energy powered by dirty coal

In Labota village, there is also an Islamic school called Madrasah Tsanawiyah Negeri, which has a coal plant operating just behind it. The students learn by breathing the coal air.

The agreement for IMIP was announced in 2013 by Indonesia’s then-president Susilo Bambang Yudhoyono, and President Xi Jinping of China. China Development Bank provided a loan of more than $1.2 billion.

According to Indonesia’s Manpower Ministry, IMIP had 28,000 employees in 2019 and 43,000 in 2020. That number has now grown to around 66,000.

Roughly 6,000 workers from China live in dormitory blocks. After the afternoon shift ended at 5 p.m., workers from China left the nickel ore processing complex or the nearby smelter of Obsidian Stainless Steel in Southeast Sulawesi. Some were dressed casually or were in uniform, while others were neatly dressed, and a few others looked shabby and covered in mud. They headed straight for a makeshift market or to eat at the Chinese restaurant on the roadside in front of the smelter.

Polluting a pristine coast

The Sulawesi coastline, in the southeast of the country, has borne the brunt of environmental destruction from the mines.

Here on North Konawe in Southeast Sulawesi, in total, there are three fishing villages around the mining locations. I saw the activity of dozens of excavators. They dug up reddish soil, loaded the soil onto trucks which took it to the jetty and unloaded the ore onto barges which traveled three to four days to the smelting factory.

The nickel was headed north to IMIP and some of the barges leaving the nickel mine were destined south, to the district of Morosi. According to data from the Indonesian government, about 50 nickel mining companies currently operate in North Konawe.

Tapunggaya, a small fishing village in North Konawe, is home to the Bajau people, an indigenous group known for being brave sailors, formidable fishermen and reliable divers who live off the sea.

Because of nickel pollution, Bajau fishermen must now travel further to find their daily catch. But fish are harder to catch in the deeper water and fishermen have to spend more money on petrol.

“We have to drive the boat at least two hours away and probably bring home just two kilograms of fish after a long day at sea,” said 32-year-old Mamat during a visit to his village in late October.

Other fishermen said that the water at the sea has not just turned murky but often becomes so hot that it causes the fish to move away.

Deforestation for metal mining

Mining activities for EV battery materials leave deep scars on the landscape. In North Konawe, it has meant the disruption of local environments and traditional ways of living for local communities.

Government data shows that in 2022 there were at least 21 floods and mudslides in Southeast Sulawesi. Between 2005 and 2008, before the proliferation of mines, there were two to three per year, according to the National Agency for Disaster Countermeasures.

In order to mine nickel, large areas of trees are cut down and the land is excavated to create open pits. With the roots of the trees no longer present to stabilise the ground, when it rains earth is more easily swept away.

Besides deforestation, other environmental hazards of expanding mining operations include pollution of water streams and fishing grounds. Pollution risks are there because to transform nickel ore to battery grade nickel, complex and less conventional methods are being used, such as High-Pressure Acid Leaching which produces toxic waste.

The coastline, once dotted with picturesque fishing hamlets, has been abandoned. Sandy beaches are discolored with a kaleidoscope of ore pigments and dotted with jetties where barges wait to deliver nickel ore.

“There’s no fish here anymore,” said Alwi, a 78-year-old fisherman sitting next to his boat in Tapunggaya. “Children also suffer from respiratory problems due to the very severe air pollution here, which is very disturbing to live in a place around the mining locations. The waste and pollution from mining have been killing us slowly.”

Three questions to consider:

  1. Why is so much money being put into nickel mining?
  2. How do nickel mining plants affect the surrounding environment?
  3. What do you think can be done so that we can still build electric vehicles and protect the environment at the same time?
Garry Lotulung

Garry Lotulung is a freelance photojournalist and documentary photographer based in Jakarta. Lotulung has specialized in stories about the human condition, social change and environmental crises. Lotulung joined the international news agency Anadolu Agency in 2022 and has been a regular contributor and stringer since.

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WorldAsiaMining nickel comes with big costs