President Joko “Jokowi” Widodo’s vision to position Indonesia as a global hub for electric vehicle (EV) battery production has thrust the nation’s mining commodities, particularly nickel, into the limelight.
Since the enactment of a 2020 law mandating the downstream processing of mining commodities for increased value, Indonesia’s nickel production and exports have seen a remarkable surge. The government aims to have 30 new nickel smelters operational this year, a substantial increase from the 13 smelters under construction by mid-2023.
However, controversies surrounding Indonesia’s nickel sector cannot be ignored. Environmental and social impacts from nickel mining and processing, including deforestation, biodiversity loss, and community displacement, have drawn frequent attention. Additionally, the upheaval caused by Indonesia’s nickel export ban, leading to a 2021 lawsuit at the World Trade Organization, coupled with the collapse of nickel prices due to oversupply, have been significant challenges.
The issues around Indonesia’s nickel industry were also politicized during the 2024 Presidential Election, with competing candidates leveraging them to their advantage. Prabowo Subianto and Jokowi’s son, Gibran Rakabuming Raka, emerged as the winning pair, signaling their commitment to continuing Jokowi’s nickel program. Their opponents accused them of mishandling the nickel sector, further complicating the discourse.
As the world’s largest nickel producer and reserve holder, Indonesia’s move towards downstream processing appears inevitable. Yet, the sustainability of continuous extraction and value addition remains a pressing question.
To delve into this matter, The Conversation Indonesia conducted interviews with experts to dissect crucial aspects ensuring the sustainability of Indonesia’s nickel industry.
- Reframing the narrative: The complexity of sustainability issues in Indonesia’s nickel industry, entangled with economic, social, and environmental concerns, necessitates a broader discourse. The dominant narrative linking nickel downstreaming to Indonesia’s ambition in the EV battery market overlooks its diverse applications, such as stainless steel production. A realignment of ambitions and narratives is crucial for a comprehensive discussion.
- Incentivizing decarbonization and waste management: The inherently challenging nature of mining and processing requires innovative approaches for environmental sustainability. Integrating renewable energy sources, investing in low-emission equipment, and promoting waste recycling are essential steps. Government support through incentives for emission reduction is imperative to drive industry-wide adoption.
- Consumer pressures: Beyond governmental efforts, consumers play a pivotal role in demanding sustainable practices. Indonesian nickel consumers, particularly in the EV and stainless steel industries, can exert pressure for environmentally friendly sourcing and processing. Aligning with global sustainability standards can drive industry-wide transformation.
- Strengthening environmental regulations: Robust environmental regulations and their strict enforcement are paramount to ensure industry sustainability. Addressing shortcomings in enforcement, such as corruption and resource constraints, is crucial. Additionally, involving local communities in the regulatory process can enhance oversight and accountability.
- Fostering transparency and accountability: Transparency and accountability are foundational for building trust and ensuring adherence to sustainability standards. Enhanced transparency in mining and processing operations, coupled with accountability mechanisms, is essential. This includes involving stakeholders in monitoring and reporting environmental violations.
In navigating the sustainability of Indonesia’s nickel industry, addressing these key considerations is imperative. A holistic approach involving stakeholders at all levels is essential for achieving long-term environmental and economic viability.
