Nickel mining for the energy transition: who is accountable for the damage?

Marius with members of the Indonesian Coalition for Economic Justice (MKE)

Because of the energy transition, recent years have witnessed a steep increase in the resources needed to produce these technologies. This includes the metals and minerals used for solar panels, windmills and electric vehicles such as copper, lithium and nickel. Inevitably, this is putting strain on the regions and communities where these resources are mined. If we want to make our energy transition also a just transition, we need to ensure that this does not come at the expense of local communities and ecosystems.

Marius visited Morowali region, a hotspot for nickel mining

By some estimates, Indonesia supplies over a fourth of the world resource supply. It has the largest nickel reserves in the world, as well as large quantities of bauxite and cobalt – all of which are key resources for the energy transition. For our research, we visited Morowali Industrial Park (IMIP), Indonesia’s largest nickel industrial area, and Indonesia Huabao Industrial Park (IHIP), both in Morowali regency on East Sulawesi. 

Impacts on people and the environment

Nickel mining leads to large-scale deforestation

Per definition, mining is an activity with a large ecological footprint; large tracts of land are cleared and destroyed to make room for the mines. This often goes hand in hand with deforestation and a loss of biodiversity, which is evident from the air above Morowali; one can clearly see the scars on the landscape left by the deforestation of the rainforest to facilitate the mining. The extraction of raw materials also involves the use of chemicals to separate raw materials from the ore. After extraction, residual products remain in the form of leftover rock and so-called tailings. If these are not stored carefully, there is a risk that they will mix with surface water or cause flooding and landslides.

The rivers are murky and brown from mixing with the tailings from the mines

In Morowali, this is clearly visible: the rivers running into the ocean are murky and brown from mixing with the tailings from the mines, and landslides are common. The polluted water then endangers the health of humans and animals, especially given that there are kids swimming and bathing in these very same rivers. 

Nickel refining is a dirty business; smoking chimneys are everywhere

The nickel refining process is a dirty business in its own right. While travelling through the region, the scale of the industrial developments become clear: to power the nickel smelters, polluting coal-fired power plants are being built by the dozens. Everywhere you look, there are smoking chimneys and gigantic open-air coal storages. Communities sometimes live only tens of meters away from the smoke-belching power plants, causing an epidemic of respiratory problems among its residents. Chronic lung problems are prevalent in the region, many of them among children. What’s more, these power plants are a disaster for the climate because of their enormous CO2 emissions, completely negating Indonesia’s gains in reducing its nationwide emissions.

Meeting with members of labour union SPIM

Meanwhile, workers in the nickel industry work in these dangerous conditions every day. Morowali provides hundreds of thousands of workplaces in the nickel industry. We were able to meet with SPIM, the labour union for IMIP industrial park and speak to over a dozen workers over a three hour meeting. They are well aware of the dangers they face, but many of them do not have an alternative and a dangerous job is better than no job at all. They told us about the heat and smoke they have to work in, often without adequate protective equipment. This regularly leads to workplace accidents, even fatal ones. According to one of the workers, they work “with one leg in the factory, one leg in the grave”. 

Who is accountable?

Affected communities have nowhere to turn

Yet, the affected communities and workers who want to address the environmental problems and human rights violations they face, have nowhere to turn. The vast majority of companies active in the nickel mining and processing in Indonesia is from China. The nickel is then shipped to China for processing into, for instance, batteries for electric vehicles. These batteries (by the well-known Chinese firm CATL, for example) are then used in various European cars, like Volkswagen and Mercedes. According to the workers and affected communities, it is very challenging to get Chinese companies to take responsibility for the negative impacts of the mining and refining activities.

Indonesia's nickel mining projects are classified as "National Strategic Projects", for which governance is transferred to the national government. Subnational governments are sidelined

Neither can they turn to their subnational or local governments. This is because Indonesia’s nickel mining projects are oftentimes classified as “National Strategic Projects”, for which governance is transferred to the national government. Subnational governments are sidelined, making it impossible for them to say no to potentially harmful projects in their region. As the national government applies exceptions to environmental laws and regulations to projects that receive this classification, they have become rather controversial. It opens the door to all kinds of abuses both at the social and environmental level. In the end, communities affected by the nickel industry have nowhere to turn. They find themselves in a Wild West, where human and environmental rights are brushed aside to maximize production.

“Change requires sacrifices”

This pepper farmer had land taken away for nickel mining and now educates other farmers about their legal rights

Despite all this, the answers to the question ‘do you see the mining industry as having a positive or negative impact on you’ were not all what I had expected. Even farmers who had lived in Morowali before the mining boom, did see some benefits along with the obvious negative impacts. A pepper farmer who had had a part of her land taken away for mining purposes, said that the recent influx of workers in her town had given her the opportunity to rent out rooms. Other farmers had opened stalls and shops along the main street. A former farmer, now in the town’s supervisory board, observed “we want Indonesia to stop selling only raw materials, we need to industrialize” and said that “any change requires some sacrifices”. That means a lot, coming from someone who lives only two hundred meters from an enormous coal-fired power plant. Other former farmers, however, suffer only the negative consequences: having lost their land and therefore their livelihoods, local communities have to resort to other ways for providing themselves. This has had profound consequences, particularly on women. Some women end up working dangerous, low-paid jobs in the nickel industry and their very limited economic choices have led to a significant rise in prostitution in the region as well. 

There’s no just energy transition without regulation

The nickel industry operates with little concern for the local environment

What everybody agreed about, is that oversight and regulation of the mining industry is wholly inadequate. Corporations operate in a lawless environment with little concern for health, human rights and the local environment. Unfortunately, the EU-Indonesia free trade agreement that is now close to conclusion, will only make things worse. The EU has made it clear that it wants to get access to Indonesia’s resources, meaning demand for resources like nickel will increase. This will accelerate the already destructive extraction and exploitation and put additional strain on communities and the environment. 

Binding regulations are needed to prevent the unlimited destruction of the environment

It is key that measures are taken to guarantee that social and environmental standards are respected, in the form of binding provisions in trade agreements that make it possible to hold corporations accountable in the event of abuses. Shockingly, these binding clauses are absent in the EU-Indonesia CEPA. It also once again shows the importance of due diligence legislation in the EU, committing European businesses to prevent abuses in their value chain. To make matters worse, this legislation is at risk of being completely undermined by the Omnibus proposal.

Don’t sign the EU-Indonesia CEPA

We find ourselves at a critical juncture. If we want to get the energy transition right, we have to make absolutely sure that clean energy technologies do not exacerbate environmental and human rights violations in the places where resources are extracted, as is the case in Morowali. This requires guard rails in the form of rules and regulation, otherwise this high-speed train will run off the track very soon. In the case of the EU-Indonesia CEPA this means: not signing the agreement, unless binding and functioning measures are taken to hold corporations and governments accountable for the negative impacts of increased resource extraction in Indonesia. This is the message we at Both ENDS, together with our partner network, will be transmitting to European member states and the Indonesian government. 

For a just energy transition, we have to make sure that clean energy technologies do not exacerbate environmental and human rights violations in the places where resources are extracted