Channel News Asia-Farmer Ratna, 65, had been walking barefoot for 40 minutes through a hilly plantation covered with lush cashew and coconut trees on the Indonesian island of Wawonii.
The air was humid and the soil was wet from a steady downpour which had stopped less than an hour earlier, but that did not prevent her from moving nimbly.
“We’re almost there. Come,” she told CNA.
A few minutes later, she ran downwards to a creek.
“This, this is my land!”
“The excavator was there, going towards the creek,” she said while pointing to a spot near the tributary.
She added: “It was there when we clashed with them.”
Mdm Ratna, who goes by one name, was referring to a confrontation between residents and workers from nickel mining company Gema Kreasi Perdana (GKP) in early March.
Locals shouted and lay on the ground in an attempt to prevent GKP’s excavator from moving forward. The excavator had to stop.
Mdm Ratna is one of many Wawonii islanders who oppose the presence of the company on the small island of 37,000 inhabitants.
They have been fighting against mining operations for the last five years, hoping to preserve their livelihoods and the environment as they fear that mining would ruin them.
However, as trees were chopped down, paving the way for GKP to mine nickel, Ratna and the others feared they might lose the battle.
Land clearing has been ongoing and mining is scheduled to start as soon as possible.
This comes as Indonesia aims to be a global player in the electric vehicle (EV) industry given that it is the world’s largest nickel producer, a key component of the batteries which power the vehicles.
In 2021, Indonesia was the biggest nickel producer in the world, producing one million metric tons of nickel, according to the United States Geological Survey, an agency which provides information on natural resource conditions.
About 22 per cent of the world’s known nickel reserves are in the archipelago.
Eventually, the government also wants EV cars to be manufactured locally.
While the economic case may appear to be clear cut, not all locals are convinced.
Environmental analysts also believe the path Indonesia is taking to fulfil its objective may come at a huge cost, unless regulations are adhered to closely.
AMBITIOUS PLANS
The government has spelt out its ambitions.
“We must become an important player in the global supply chain in the electric car industry,” said President Joko Widodo on Mar 16 when inaugurating a Hyundai Motor factory and launching Hyundai’s IONIQ 5 in Bekasi, West Java.
“Our country has enormous mineral resources to support the development of electric cars,” he added.
Rich in natural resources, Indonesia has long been an exporter of raw materials.
In an attempt to spur higher-value smelting industries in the country, the government banned the export of nickel ore in 2014 so that it would be processed domestically.
Indonesia’s nickel reserves are mostly in North Maluku, Central Sulawesi and Southeast Sulawesi provinces, which are also the key nickel-producing regions.
The 2014 move triggered an influx of foreign investments. Particularly, Chinese companies looked to invest in nickel processing in Southeast Asia’s biggest economy.
Shanghai Decent Investment, whose parent company Tsingshan is the world’s largest stainless steel producer, invested in the downstream nickel processing sector through Indonesia Morowali Industrial Park (IMIP) in Central Sulawesi.
Spanning 2,000 ha, IMIP claims to be the longest industrial chain in the world, producing nickel, stainless steel and carbon steel. These products can be used for any industry, not just EVs.
The industrial park began operations in 2015 and is supported by coal power plants, seaports and an airport. It is currently home to at least 18 companies such as Huayue and QMB New Energy Materials.
But in 2017, the government revoked the nickel ore export ban due to falling production and sluggish smelter development.
Investors were still keen to develop another hub for the nickel industry in Indonesia. In 2020, Indonesia Weda Bay Industrial Park (IWIP) began operations in North Maluku.
The nickel-based industrial hub is a joint venture between three Chinese investors, namely Tsingshan, Huayou and Zenshi, according to the Ministry of Investment.
The hub claims to be the first integrated industrial estate in Indonesia, which is intended to facilitate the mineral processing and production of EV battery components.
As the market recovered, the authorities again banned nickel exports in 2020.
That year, the government established the Konawe Industrial Zone in Southeast Sulawesi, focusing on ferronickel development.
Ferronickel is a mineral containing about 25 to 40 per cent nickel and about 60 per cent iron.
The two main companies operating there are Virtue Dragon Nickel Industry, which smelters nickel ore and claims to be the largest smelter in Indonesia, and Obsidian Stainless Steel (OSS).
To support the nickel industry, four mining and energy-focused state-owned enterprises formed Indonesia Battery Corporation (IBC) in March last year. IBC is a holding company to manage the battery industry ecosystem, especially for EVs.
In September last year, Jokowi, as the Indonesian president is commonly known, led the groundbreaking ceremony of an EV battery factory PT HKML Battery Indonesia. It is the first EV battery plant in Southeast Asia.
The project in Karawang, West Java is a joint venture between Indonesia and South Korea’s Hyundai Motor Group and LG Energy Solution.
Meanwhile, when inaugurating the Hyundai Motor factory on Mar 16, Mr Widodo said: “The year 2022 will be important for the development of lithium batteries for electric vehicles.”
“Several investors will start constructing (smelters and refining plants, which will be) ready to process our nickel and cobalt into lithium battery materials.”
Apart from aiming to be a global player in the EV industry, the president stated that Indonesia must also transition from fossil fuel-based cars to electric cars.
In 2024, Indonesia would be manufacturing EVs and other related components, he added.
Late last month, Coordinating Minister for Maritime Affairs and Investments Luhut Pandjaitan announced that he had met Tesla CEO Elon Musk in Austin, Texas.
According to the minister, they met to talk about “Indonesia’s big potential in the nickel industry,” which Tesla as an EV manufacturer could need.
He also revealed that Jokowi is scheduled to meet Mr Musk during the president’s visit to the US this week.
When meeting business leaders in the US on Thursday (May 12), the president said he welcomed them to invest in Indonesia, which is seeing rapid growth in the iron and steel industry.
The mining products will form the backbone of new energy and renewable energy industries, he added, including the production of lithium batteries and electric cars.
BETTER INCOME AND INFRASTRUCTURE
On the surface, the economic case for boosting the nickel industry is clear as it would bring jobs, foreign investments and tax receipts.
The EV battery factory in Karawang alone is an investment of US$1.1 billion, said Jokowi during the groundbreaking.
As of 2020, at least 40,000 jobs have been created by the IMIP in Central Sulawesi. According to the investment ministry, the industrial park attracted around US$126.5 million worth of investments. In that year, IMIP paid taxes and royalties of around 5.37 trillion rupiah (US$366 million).
Meanwhile, IWIP in North Maluku has attracted US$10 billion worth of investments.
On the ground, some have seen the economic benefits.
In Konawe, about an hour’s drive from Southeast Sulawesi’s capital Kendari, locals interviewed by CNA said their income has increased.
Clothing seller Wati, 40, is originally from a subdistrict in Kendari and has a store there. But she has now set up another store in Konawe’s industrial area since there is higher demand.
“On good days, I can earn 5 million rupiah. At the other shop the sales are not so good,” said the woman who goes by one name.
Likewise, Mr Ardiman, who owns a minimart, said before the industrial area was established, he could earn about 3 million rupiah per day. Now, the 50-year-old who goes by one name said he earns up to 40 million rupiah daily.
GKP, the nickel mining company in Wawonii, said it has brought better infrastructure to the locals, too.
Its spokesman Marlion told CNA that even though the company has yet to start mining operations, its presence on the island means that people can enjoy 4G connectivity as it has built a communication tower.
“There was no Internet there, so we built a (communication) tower and it was finished within a few months,” said Mr Marlion, who goes by one name.
“And not to mention the other things we have built, like a bridge and so on.”
ENVIRONMENTAL IMPACT OF MINING
But there are also downsides, especially from the environmental perspective.
Social worker Rismanto, who lives about 1km away from a coal power plant in North Konawe serving the Konawe industrial zone, is frustrated over the environmental pollutants.
“There are lots of activities in the coal power plant area such as dismantling equipment at a nearby port owned by OSS. Almost every day, ships come and go,” he said.
Mr Rismanto added: “The impact that can be felt directly is the amount of coal dust flying in the air, which is carried by the wind to residential areas within a radius of about 4km. This happens because of coal unloading.”
“Not only that, we also often see factory pollution directly from the coal plant, where smoke from the funnels soars very clearly straight into the sky. The cars transporting the coal also bring dust, which is very disturbing.”
Mr Rismanto, who also goes by one name, claimed that many villagers have suffered from respiratory problems, although it is hard for them to prove that it is a result of the air pollution.
Mr Ahmad Ashov, programme director with Jakarta-based non-governmental organisation Trend Asia, which focuses on sustainable energy, said the government’s ambitions are problematic.
This is because it aims to do so without revealing how to use clean energy and dispose of the mining waste properly, he said.
“Mining will change landscapes. It involves a variety of chemicals and can disturb catchment areas. There will be tailings or waste, and smelting and refining also need a lot of energy (generated) from coal power plants,” he said.
Mr Melky Nahar, head of campaign with JATAM asserted that nickel mining has caused environmental problems such as polluted water and air. JATAM is an NGO focusing on issues concerning human rights, gender, the environment, indigenous people and social justice in relation to the mining, oil and gas industries.
In Morowali, for instance, fishermen were forced to switch jobs to become unskilled labourers due to limited catches following the mining activities, he said.
“People’s livelihood is under threat due to mining.”
Other associated issues include forest loss which makes regions prone to flooding as well as the threats to habitats, Mr Nahar added.
North Maluku and Sulawesi are home to endangered species and located near the Coral Triangle in the Pacific Ocean, where 75 per cent of the world’s coral species are located.
IMIP, IWIP, and Konawe Industrial Zone are all near the bay and companies pipe their waste to the sea, Mr Nahar claimed. The disposal process is known as deep sea tailings placement.
“There’s the Coral Triangle and internationally people want to preserve it. And one of our concerns is about the deep sea tailings which would impact the coral reefs and marine biota severely,” he said.
To operate the smelters, a huge amount of energy is also needed. The bulk of power supply requirements is met by coal power plants in the area.
Photo: Presidential Secretariat Press Bureau/Laily Rachev