Nickel smelting at an Indonesian facility in Soroako, South Sulawesi AFP/Bannu MAZANDRA
As American electric vehicle maker Tesla eyes up a hefty investment in Indonesia, concerns are growing over the potential environmental consequences of a nickel mining rush.
Tesla has reportedly tabled a proposal to establish a battery production facility in the country, though no official announcement has been made and government decision-makers remain tight-lipped about details.
Still, the prospects of Indonesia becoming a global hub for battery production in the electric vehicle (EV) revolution, and a key link in the global supply chain, has already seen mining and nickel processing ramp up across the country.
Indonesia has vast resources of nickel - it has about a quarter of the entire world’s supply. It is an increasingly crucial metal in batteries due to its properties that enable mass energy capabilities. Macquarie Bank analysis estimates Indonesia could be the source of half the global supply of nickel and stainless steel within four years.
Nickel is seen as a replacement battery component for cobalt, which is more expensive and poses human rights issues due to it being mined in the Democratic Republic of Congo.
“Go for efficiency, obviously environmentally friendly nickel mining at high volume. Tesla will give you a giant contract for a long period of time, if you mine nickel efficiently and in an environmentally sensitive way. Please get nickel," he said.
But Musk’s call for sustainable nickel in the current Indonesian landscape will be a difficult one to answer, according to analysts. Nickel mining in Indonesia has a dirty track record and the rush to extract and process more of it will add pressure to an industry with opaque rules and regulations.
“I think the statement is an illusion or a contradictory statement. What does sustainable nickel mean? Mining is an unsustainable production,” said Arianto Sangadji, a leading researcher on the industry from the York Centre for Asian Research at York University.“You must consume large amounts of fossil fuel to power the machines for clearing forests, digging the earth, and transporting ore. The more nickel ore is produced, the more fossil fuel is consumed, which has a great impact on climate change,” he said.
Dirty aspects of nickel mining are expected to be difficult to mitigate. From the mines to the smelters, nickel leaves an impact, on local ecosystems and on climate change.
But the opportunity for Indonesia remains enormous; one potentially even more valuable than its vast palm oil industry. The International Energy Agency predicts that some 70 million EVs will be on roads by 2025 and a huge number could contain battery parts mined and manufactured in Indonesia//CNA