On 24 December 2023, thousands of workers at the Morowali Industrial Park on the Indonesian island of Sulawesi showed up for work at the web of nickel smelters and power plants that make up the sprawling industrial complex.
Twenty-one of those workers died that day or in the days following, and dozens of others were seriously injured.
The workplace tragedy happened after a fire broke out at a nickel smelter owned by Chinese conglomerate Tsingshan Stainless Steel Indonesia.
In the days following the fire, Indonesian authorities told Reuters there were strong indications that safety procedures had not been followed at the site.
The country continues to increase its nickel output for many buyers, including several international car makers who need the coveted metal to make electric vehicle batteries
But despite the dangers to workers and locals, the nickel trade in Indonesia is booming. The country continues to increase its nickel output for many buyers, including several international car makers who need the coveted metal to make electric vehicle batteries.
A year on, activists say working and safety conditions at sites across the region have seen little improvement. In addition, the environmental impacts on communities surrounding the mines and smelters continue to worsen.
Indonesian nickel
Nickel is traditionally used in stainless steel manufacturing, which still consumes most of the world's nickel supply. But production demands are shifting with the rapid rise of electric vehicles.
There are many different uses for nickel, but EVs are driving demand for the critical metal. As the sale of EVs in countries like Australia grows, the mining and smelting industry in Indonesia is racing to keep up.
Between 2010 and 2023, global nickel production more than doubled. Indonesia currently makes up around 50% of all global nickel output and that's expected to grow in the coming decades.
Indonesia currently makes up around 50% of all global nickel output and that's expected to grow in the coming decades
Mohan Yellishetty, an associate professor at Monash University's department of civil engineering, says Indonesia is aiming to produce 75% of the world's nickel by 2040. The country produces nickel at a much cheaper price than competitors like Australia, so is undercutting domestic production here.
To help grow the local economy and create more jobs, Jakarta has moved to ban the export of raw nickel ore exports. Since 2022, minerals have been required to be processed in-country before being exported.
That has led to an investment boom, mainly from Chinese companies. While much of the processed nickel is exported to China and EV manufacturing companies such as BYD, western car makers hungry for nickel are also major buyers.
Tesla, Ford and Volkswagen all have ties to the Indonesian nickel supply chain
Krista Shennum from international environmental NGO Climate Rights International says Tesla, Ford and Volkswagen all have ties to the Indonesian nickel supply chain.
"It is the responsibility of those companies to ensure that they are using their leverage as a purchaser to demand higher standards, [and] to demand that the companies they're buying nickel from are not contributing to human rights abuses, they're not taking land from people and polluting people's water, and [that] they're really upholding the rights of local communities and of workers."
Environmental concerns
Shennum and her colleagues travelled to Indonesia in 2023 to document the huge environmental costs of the nickel boom. Their report, Nickel Unearthed, highlights the stories of dozens of villagers who had lost land to nickel mines or whose traditional fishing lifestyles had disappeared due to poisoned waterways.
"Some companies, in coordination with Indonesian police and military personnel, have engaged in land-grabbing, coercion, and intimidation of Indigenous Peoples and other communities, who are experiencing serious and potentially existential threats to their traditional ways of life," the report reads.
"You have mass destruction of the natural environment … there are really beautiful forests that are just being absolutely destroyed. You have essentially [mine] tailings that aren't properly being managed," says Shennum. "We visited entire communities that no longer have access to clean drinking water."
We visited entire communities that no longer have access to clean drinking water
Krista Shennum, Climate Rights International
A further concern is the massive amounts of coal used to power nickel smelting. At three of the biggest nickel industrial parks – Obi Island, Morowali and Weda Bay – the country has planned to double the nickel industry's current power usage. The amount being invested in renewable energy projects to power the nickel industry is just a fraction of the investment in coal.
The fallacy of using coal to power the 'green vehicle' revolution is not lost on Shennum.
"At Welda Bay Industrial Park, once it's fully operational, there will be 12 new captive coal plants that didn't exist five years ago," she says. "That's 3.8 gigawatts of coal capacity, or roughly what is burned in all of Spain every year, just at this one industrial park in Indonesia."
Concerns for workers persist
Zakki Amali is the research manager at Trend Asia, a Jakarta-based NGO that focuses on sustainable development in the region.
He says the labour rights and safety of workers and nickel smelting plants around the country hasn't improved significantly since the disaster in December last year.
"The safety situation remains as usual, because at the nickel smelters there are accidents all the time, so safety is a big issue," Zakki says.
According to local media reports, as of December 2024, almost a year on from the disaster, fewer than half of the 50 tenants of the Morowali Industrial Park had completed their mandatory occupational health and safety certification from the government.
Many of the workers in these industrial parks come from other parts of Indonesia, and there are also many Chinese labourers.
The government only cares about how to extract all commodities from Indonesia to grow the economy
Zakki Amali, Jakarta-based NGO Trend Asia
Zakki says he is concerned the situation for workers will only get worse. The government led by Indonesian President Prabowo Subianto, who took power in October 2024, has set ambitious goals to grow the economy.
Zakki believes Prabowo's administration won't focus on workers safety and the environment because of its focus on economic growth. "The government only cares about how to extract all commodities from Indonesia to grow the economy," he says.
Australian ties
While Indonesian nickel companies may have displaced Australian nickel mines, which struggle to compete with the low-cost product coming from our northern neighbour, Australian companies are determined not to miss out on the action.
Nickel Industries Limited is an ASX-listed company with growing investments in Indonesia. It owns a controlling stake in the Hengjaya Mine in Sulawesi and four smelting furnaces. Nickel Industries also has a strategic investment partnership with Chinese company Tsingshan, which holds other nickel investments in the area.
Nickel Industries has had no record of human rights abuses, and analysts like Yellishetty say Australian companies can have a positive impact on improving worker conditions in Indonesia.
Australian companies can have a positive impact on improving worker conditions in Indonesia
"Australia has a high standard when it comes to these things. Of course it may not be as high when operating in Indonesia [compared to in Australia], but it would still be relatively high in the global context," he says.
Canberra has also sought to help facilitate the growth of investment in Indonesian nickel from Australian companies by signing a Memorandum of Understanding with Indonesia on EVs and nickel in November 2023.
"By collaborating on growing strong and diverse clean energy supply chains, both countries can further our shared economic interests as well as our trade and investment links," Minister for Industry and Science Ed Husic said at the time.
"This mechanism also paves the way for harnessing joint scientific and research studies, including around critical minerals processing and battery development, and facilitating partnerships between businesses in both our countries."
Role for EV buyers
Yellishetty says Australian buyers of electric vehicles have a role to play in pressuring car makers to be more open and transparent about their supply chains and encouraging companies to improve environmental and labour conditions.
"Most people on the receiving end don't have an idea of how a product moves, [or] where particular components that go into manufacturing EVs are manufactured. But car companies can be more upfront about this," he says.
Shennum agrees that consumers are likely in the dark about what has taken place in the manufacture of their vehicle.
There really needs to be an understanding that what's happening at the current level ... is just not in line with a just energy transition we want to see
Krista Shennum, Climate Rights International
"There really needs to be an understanding that what's happening at the current level, in terms of burning fossil fuels to power nickel, stealing land from people and harming people and Indigenous peoples' rights, is just not in line with a just energy transition we want to see."
"The way that it's currently being done is not a climate solution. You can't build new coal plants to power electric vehicles in countries like Australia and call that a climate solution," she says.
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