Indonesia’s Small Islands Pay the Price for Nickel Mining

The push for electric vehicles (EVs) offers a promising path to a cleaner future, but the mining of materials for EV batteries is causing significant harm to Indonesia’s small islands. Nickel, a crucial component of many EV batteries, is at the heart of this issue, driving mining operations that are devastating local ecosystems and communities.

Nickel-based batteries, particularly those using Nickel Cobalt Manganese (NCM), make up 60% of the global EV market, according to the Global EV Outlook 2023. Although alternatives like Lithium Ferro Phosphate (LFP) are becoming more popular, nickel demand remains high. In July 2024, global EV sales surged by 21% compared to the previous year, with Chinese-made vehicles accounting for a large portion of the sales—800,000 units.

Indonesia, with 52% of the world’s nickel reserves, has become a central player in the EV supply chain. The country’s nickel exports surged tenfold by 2023, driven by government policies encouraging “downstreaming”—the refining of raw nickel into higher-value products. Most of these exports go to China, which imported nearly four million tons of Indonesian nickel in 2023, while Japan, Australia, and Greece imported much smaller amounts.

However, the nickel mining boom is taking a heavy toll on islands like Obi and Wawonii. In Obi, joint mining operations by China’s Lygend Resources and Indonesia’s Harita Group have ravaged forests and contaminated water supplies. Similarly, on Wawonii, an island east of Borneo, mining has brought severe environmental degradation. The island’s once-thriving agricultural and fishing communities now face shortages of clean water and declining air quality. What was once a source of prosperity has turned into hardship as mining companies have moved in.

Before mining began, Wawonii’s residents relied on agriculture—growing cloves, nutmeg, coconuts, and cashews—to provide food, income, and educational funds. Fishing was also a vital part of daily life, with abundant catches sustaining the community’s diet. Today, mining dust damages crops, and fishermen must travel farther from shore to find fish, increasing costs and lowering profits.

The Indonesian government’s approval of mining on small islands, despite a 2007 law banning such activities, underscores a troubling disregard for environmental protections. Although the Indonesian Supreme Court has ruled in favor of residents seeking to protect their land, mining continues. This has led to deep divisions within communities, with pro-mining and anti-mining factions emerging, fracturing the social fabric that once thrived on cooperation and mutual support.

With little external pressure, the Indonesian government shows little inclination to change its course, prioritizing economic growth over the well-being of its citizens and the environment.
China, as the largest importer of Indonesian nickel, bears significant responsibility for ensuring that its nickel supply chain is sustainable. The European Union, the UK, and the U.S. have already demonstrated that policy-driven demand for environmentally responsible products can lead to change. For example, their “deforestation-free” policies for palm oil helped spur reforms in Indonesia’s palm oil industry. Similarly, China could push for more responsible practices in the nickel supply chain by insisting on stricter environmental and social standards for the nickel it imports.

Without such external pressure, the Indonesian government is unlikely to change its policies. But China’s role as the primary consumer of Indonesian nickel places it in a unique position to influence mining practices. By sourcing nickel only from mines that adhere to responsible environmental and social practices, China could help mitigate the damage done to Indonesia’s islands.
If China fails to act, the consequences will extend beyond Indonesia’s borders. The global push for sustainable technologies must consider not only the end products—such as electric vehicles—but also the entire supply chain that enables their production. Only by addressing the environmental and social impacts of resource extraction can the promise of clean energy be realized without sacrificing vulnerable communities and their ecosystems.

Firdaus Cahyadi is an environmental consultant with years of experience in Indonesia and a regular columnist for some of the country’s largest news outlets.