The global transition to electric vehicles is driving rapid expansion of Indonesia's nickel industry – but do the benefits outweigh the costs? ABC Indonesia's Hellena Souisa travelled to Sulawesi to investigate.
The small fishing village of Kurisa is home to the Bajau people, an indigenous group known for being brave sailors, formidable fishermen and reliable divers who live off the sea.
But Bajau man Sakka says the sea he once relied on for his livelihood has changed.
"The seawater is warmer now and there are no fish to catch," he said. "We used to have a lot of whitefish in the cages down here... but they all died."
Sakka and other fishermen believe "the company" neighbouring their village is responsible, pointing to water that empties into an estuary a few hundred meters from their homes.
"The company" – a sprawling nickel industrial area better known as the Indonesia Morowali Industrial Park (IMIP) – is a site of national strategic importance to Indonesia and one of the first minerals processing mega-developments that has enabled the country to emerge as the biggest refiner of nickel in the world.
Built with billions of dollars of mostly Chinese money over the last decade, IMIP in Central Sulawesi now spans more than 20 square kilometres with infrastructure including an airport, seaport, and worker accommodation that supports 52 enterprises.
IMIP primarily processes nickel ore for stainless steel but now is increasingly producing higher-grade nickel for electric vehicle (EV) batteries.
The shift reflects a broader trend in Indonesia's rapidly developing nickel industry, which is creating opportunities for some while leaving others struggling just to survive.
'It's very hard for sea people like me'
When construction began at IMIP in 2013, the park connected nearby villages to electricity and gave away boats, Kurisa's residents told the ABC.
Sakka uses his boat to travel kilometres away to fish in the Banda Sea. But fish are harder to catch in the deeper water and he has to spend more money on petrol.
"What's the point of a boat if there are no fish?" he said.
Sakka said villagers no longer even swim in the water surrounding their houses because it gives them itchy skin. "We never jump into the water now."
Bajau mother-of-three Astia opened a small grocery store two years ago because her husband's fishing earnings became unreliable.
"The profit might only be [small], but it's more certain than depending on the sea," she said.
Her family no longer eat the local catch because of contamination concerns.
When she has enough money, she buys fish or instant noodles from other villages. "It's very hard for sea people like me," she said.
Astia said dust from the coal-fired power plants at IMIP also covers the utensils, plates and furniture in her house.
"Once a week, I have to wipe everything or rewash them because it is covered with coal dust," she said.
But at least now she can send her youngest child to kindergarten, she added. "For years there has been no kindergarten here, but now it's about to open. It's from IMIP and free."
Clean energy drives future nickel demand
Australia and Indonesia have the largest nickel reserves in the world.
About 90 per cent of Indonesia's resource is spread across the island provinces of Central Sulawesi, South Sulawesi, South-East Sulawesi, and North Maluku, according to Indonesia's Energy and Resources Ministry.
Chinese ventures like IMIP, a partnership between China's stainless-steel giant Tsingshan Holding Group and Indonesia's Bintang Delapan Group, have proliferated since President Joko Widodo first banned the export of unprocessed minerals in 2014.
The ban "ushered in a new era of growth and prosperity for the people of Indonesia," according to Indonesia Chamber of Commerce chairman Arsjad Rasjid, with the mining sector now contributing more than 12 per cent to the country's gross domestic product.
"This means that our nickel exports, which stood at a modest $US3.3 million ($5.13 million) in 2018, have reached nearly $US30 billion in 2022," Mr Rasjid said.
But as the nickel industry has grown, so too have concerns about its environmental and social impacts.
Indonesian environmental and activist groups have documented a litany of problems, from deforestation to air pollution and labour rights issues. But none of those concerns appear to be slowing the nickel rush.
Nickel – used in EV batteries to achieve better performance and longer range at lower weights than other battery types – is a key resource in the global transition to EVs.
The International Energy Agency (IEA) predicts global demand for the metal will grow at least 65 per cent 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 Electric Vehicle Council estimated 40 per cent of EVs sold in Australia this year had a battery with a nickel-based chemistry.
Tesla – which sells more electric cars in Australia than any other manufacturer – uses Indonesian nickel via Chinese companies Huayou Cobalt and CNGR Advanced Material.
The company has also been in discussions to establish its own battery manufacturing plant in the country.
Battery makers including South Korea's LG Energy Solution and car makers including Ford, Toyota and Hyundai have announced billions of dollars' worth of investments in Indonesia-based nickel processing plants to secure supplies of the metal as they ramp up electric vehicle production.
Technology key to industry transformation but risks remain
High-pressure acid leach (HPAL) processing is used to extract the high-grade nickel required by electric car battery manufacturers from limonite ore, one of the lower-grade ores abundant in Indonesia.
However, the disposal of waste from HPAL plants remains a contested issue. "The geography and climate of Indonesia pose challenges to environmentally safe options to treat the waste," noted the IEA in a 2023 report.
The waste, also called tailings, is what is left over after the valuable metals have been extracted.
Exactly what is in tailings, like rocks, chemicals, or water, depends on the refining process used.
Two of Indonesia's three HPAL plants are at IMIP in Central Sulawesi while the third is on nearby Obi Island, in North Maluku.
"More [HPAL plants] are in the pipeline, with nearly $US20 billion of further projects announced and seven other HPAL plants planned," Mr Rasjid said.
Chinese company Huayue Nickel Cobalt (HNC) runs one of the plants at IMIP, and a company spokesperson said waste from that facility is being disposed of in "landfill" about 7 kilometres from the industrial park.
HNC's parent company, Huayou Cobalt, said it is using "dry stack technology" licensed by the Indonesian government.
"The tailing slurry produced in Huayou's HPAL projects is pressed and filtered into filter cake with the moisture content of approximately 31 per cent," a spokesperson said.
Muhamad Jamil, from the Mining Advocacy Network (JATAM), said that process had not independently been proven as environmentally safe and questioned how much water could be removed from the waste.
He said waste from HPAL plants can have "porridge-like" consistency before it is dried.
"What happens with the 90 per cent of water from the waste? Is it evaporated? Is it thrown away? To where?" he said.
"We are afraid [what] is conveyed by the industry is an attempt to deceive people and the industry itself to issues that they themselves have not yet found a solution to.
"Thus, we challenge the industry to show us how they do the drying process."
Workers and small businesses tout economic benefits
The nickel industry in Indonesia has also brought economic and social benefits to villages, small businesses and thousands of people working in the industry.
It's estimated between 38,000 to 80,000 people work at IMIP alone, roughly 5,000 of those are from China but the majority are Indonesian.
Among them is Hendra Seno, who moved from South Sulawesi to Morowali in Central Sulawesi to work at IMIP – a job he's done for 10 hours a day, six days a week, for more than five years.
"I am happy to be able to work here because I can help my family and younger siblings," Mr Seno said.
As a field supervisor, he is paid 8 million rupiah (about $800) per month, not including overtime, and his income allows him to save some money.
"Some is for my parents, some is set aside if I want to start a family," said Mr Seno, who visits home about every four months. "I can help my family and younger siblings."
Another fly-in fly-out worker, Regin, also took a job at IMIP because of the good wages.
"It's three times higher than my previous job in a cafe, which was only 1 million to 2 million rupiah per month," he said. "That's why I came here. Now I can be independent and send some money to my family."
While the workers who spoke to the ABC had positive job experiences, advocacy organisations and unions have raised concerns over worker safety, particularly for those employed in smelter operations which mostly refine nickel for the stainless steel industry.
Unions declined to comment for this story.
The growth of the nickel industry has also created opportunities for smaller businesses. Kamsiani moved to the area five years ago to sell lunches – rice with sides that cost 10,000 rupiah ($1) – to workers at IMIP.
"I never worked before, so I came here specifically for this," she said. "The average daily profit is 500,000 rupiah ($50)."
Keri Febri's family, who own land right in front of IMIP, have opened two grocery and food shops. "Each outlet could make 13 rupiah million ($1,300) profit per day," Mr Febri said.
But as the economic prosperity around the park grows, so too do levels of air and street pollution in Morowali.
Piles of abandoned garbage litter the Trans Sulawesi Highway – a landfill and integrated waste treatment plant will reportedly be built next year – and a local health authority has linked high rates of respiratory infections to coal dust.
For IMIP employee Aidhil Kurniawan, the presence of the industrial park is a double-edged sword.
"In general, the impact is good because it helps a lot of people, but environmentally it needs to be re-evaluated, for example about the impact on the ocean."
When asked if he knew if any waste from IMIP was going into the sea, he replied diplomatically.
"You can see for yourself how the sea is. It was blue before. Now it's half-brown."
An IMIP management spokesperson said the park had a government-issued permit to discharge "liquid waste into the sea" as long as it is below 40 degrees Celsius, but said the rise in seawater temperature is caused by a "natural phenomenon called global warming".
"Wastewater is the seawater sucked [in] using a pump, which is then used to cool the power plant engine," the spokesperson said.
"Seawater that has been used is then drained back into the sea using a network of canals over more than 2 kilometres."
The spokesperson said it had several projects to deal with dust in the park, including "waste dust collectors", and suggested air pollution is also caused by mining traffic in the area.
Among the nickel companies with operations in IMIP is Australia's Nickel Industries. Chief operating officer Tony Green said the company was working to improve the environmental standards of the industry.
Nickel Industries' operations include three rotary kiln furnace projects inside IMIP and the Hengjaya Mine, a large tonnage and high-grade nickel laterite deposit down the road from IMIP.
"There is some factual evidence out there that the environmental challenges haven't been managed properly," said Mr Green. "We hope to be a [good] corporate citizen in Indonesia and turn that around."
Nickel Industries has received the Green Proper Award for environmental excellence from Indonesia's Environment Ministry.
Mr Green said the company had planted 2 million trees across 2,000 hectares to rehabilitate an area similar to the size of Hengjaya Mine.
"They will start producing income for the local people in that region probably in another three years' time, around about $500 per hectare," he said.
The company has signed an agreement with renewable energy firm SENSA to build and maintain a "battery solar project" within IMIP which will supply power to the company's three nickel processing operations. Hengjaya Mine also runs partly off solar power.
Nickel Industries' business was focused on the stainless-steel market but is now looking to become a "leading producer" of EV battery-grade nickel, and recently acquired a 10 per cent stake in the HNC HPAL facility.
It has also started construction on a second HPAL plant, the Excelsior Nickel Cobalt (ENC) project, inside IMIP.
"We're looking at building our own HPAL plant that will be led by the Tsingshan Group and Shanghai Decent," said Mr Green.
Rice farmer impacted by deforestation
Laterite nickel ore – the type found in Indonesia – tends to be close to the surface but spread across large areas, which means mines usually require wide-scale land clearing.
Jupri – a rice farmer in south-east Sulawesi province, which has the most nickel mining permits in Indonesia – has experienced the impact of deforestation firsthand.
Jupri said during the wet season his 1.5-hectare rice field was flooded by "red water".
Nearby is a nickel mine that stretches nearly 4 kilometres. "Because there are no trees anymore, it has been eroded by the people who mined above, I don't know how many nickel miners there are."
As a result of the flooding, he said, his rice grains have become "thin", and the yields decreased.
"It used to be 6 to 7 tonnes, now it's only 4 to 5," said Jupri, who also works on other people's rice fields under a profit-sharing scheme.
"As farmers, we are miserable during the rainy season," he said. If the water is clear, perhaps farmers are happy, but the water is murky from the mine, making the land infertile."
He now needs to use more fertiliser, and the amount of fertiliser subsidised by the government has not increased.
Jupri feels helpless. "We are just small people. We can't do anything [other] than put our hope in those who sit in government office."
'Our friends from IMIP ... are good'
Achmad Gunawan, an official from the Ministry of Environment in Jakarta, declined to comment on deforestation near Jupri's rice field, but said the government was working with IMIP to comply with environmental regulations.
"The result was that they need to work on the technical documents, to fix this and that which should be included in the document."
Mr Gunawan said water sampling and emission observations at IMIP showed improvements could be made. "We still need to give them guidance regarding all of them [liquid waste, emissions, hazardous and non-hazardous waste] so that we can do better."
He added that companies could face sanctions, including criminal penalties if they continued to breach regulations. "But thank God, our friends from IMIP, they are good, they followed what we suggested."
While government officials often point to the increase in export profits as a measure of Indonesia's raw mineral export ban success, Krisna Gupta from the Centre for Indonesian Policy Studies questioned that analysis.
"I keep saying [export value] is not the correct indicator if you say you want [to assess] value added domestically," said Mr Gupta.
The government has not published data that would enable much-needed independent analysis of the nickel industry, he added.
Meanwhile, the European Union (EU) lodged a complaint with the World Trade Organization over Indonesia's ban, arguing it limited EU manufacturers' nickel access. The case is still unfolding.
Mr Gupta said many international countries "are looking at Indonesia right now and wondering if they can get away with" raw mineral export bans.
"In the modern history of global trade, I am not sure what country has had [a policy] like this."
Back at the Kurisa village, Astia said she had filed multiple complaints through the head of the village to IMIP, but nothing had changed.
"At noon, the heat comes from both directions, the sun above and the seawater under the house," she said.
IMIP attributed the declining fish stock around the village to the increased population now living in Morowali, but not-for-profit JATAM said fish in the area have died because of the warm sea water temperatures.
Fishermen like Sakka are left to deal with the problem. He cannot afford to move and live in a cleaner environment.
For Sakka, as Indonesia's nickel drive heads down a new road, he will not be part of the world's clean energy revolution. For Kurisa villagers, survival is the real measure of their future success.