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Indonesia’s Nickel Boom Threatens West’s Green Goals

How the archipelago's cheap and dirty nickel production undermines the global efforts to decarbonize the economy

by Victor Adetimilehin

Indonesia is the world’s largest producer of nickel, a metal that is essential for making batteries for electric vehicles (EVs) and other clean energy technologies. But the country’s nickel industry is also a major source of pollution and greenhouse gas emissions, posing a challenge to the West’s ambitions to transition to a low-carbon future.

The rise of Indonesia’s nickel empire

Nickel is a key ingredient in the most common type of battery used in EVs, known as lithium-ion. It increases the energy density and range of the battery, making it more attractive for consumers and manufacturers. According to the International Energy Agency, global nickel demand for EVs and energy storage is expected to grow from 81,000 tonnes in 2020 to 1.4 million tonnes in 2030.

Indonesia has seized this opportunity by ramping up its nickel output and processing capacity in the past decade. The country has abundant reserves of low-grade nickel ore, also known as laterite, which is cheaper and easier to mine than the high-grade nickel sulfide found in other parts of the world.

To capture more value from its nickel resources, Indonesia banned the export of raw ore in 2014 and encouraged the development of domestic smelters and refineries. The government also offered incentives such as tax holidays and relaxed environmental regulations to attract foreign investment, especially from China, the world’s largest consumer of nickel and the leader in EV production.

As a result, Indonesia’s nickel production soared from 139,000 tonnes in 2010 to 760,000 tonnes in 2020, accounting for 23% of the global supply, according to the US Geological Survey. The country also became the first to produce battery-grade nickel from laterite ore, using a process called high-pressure acid leaching (HPAL), which was previously considered too costly and complex.

The environmental and social costs of nickel

However, Indonesia’s nickel boom has come at a high environmental and social cost. The mining and processing of laterite ore requires large amounts of energy, water, and chemicals, and generates huge amounts of waste and emissions. According to a study by the University of Queensland, the carbon footprint of HPAL is six times higher than that of conventional sulfide processing.

Indonesia’s nickel industry also poses a threat to the country’s rich biodiversity and indigenous communities. The island of Sulawesi, where most of the nickel operations are located, is home to endemic species such as the crested black macaque and the Sulawesi bear cuscus, which are endangered by habitat loss and fragmentation. The island also hosts several ethnic groups, such as the Bugis and the Toraja, who have been affected by land conflicts, displacement, and human rights violations.

The implications for the West’s green goals

Indonesia’s nickel dominance has implications for the West’s efforts to decarbonize its economy and reduce its dependence on China for critical minerals. While EVs are seen as a key solution to reduce transport emissions, the batteries that power them are still reliant on a supply chain that is carbon-intensive and geopolitically sensitive.

The West faces a dilemma: either accept Indonesia’s cheap and dirty nickel or invest in alternative sources and technologies that are more sustainable and secure. Some options include:

– Supporting the development of nickel sulfide projects in countries such as Canada, Australia, and Russia, which have lower environmental impacts and higher labor standards than Indonesia.

– Promoting the recycling and reuse of nickel from existing batteries, which can reduce the demand for primary production and extend the life cycle of the metal.

– Encouraging the innovation and adoption of new battery chemistries that use less or no nickel, such as lithium iron phosphate (LFP) or solid-state batteries, which can also offer advantages in terms of safety and performance.

The choice is not easy, as each option has its own trade-offs and challenges. But the West cannot afford to ignore the issue, as the demand for nickel and other battery metals will only increase as the world shifts to a greener and more electrified future.


Indonesia’s nickel boom is a double-edged sword for the global energy transition. On the one hand, it provides a vital ingredient for the EV revolution and a competitive edge for the country’s economy. On the other hand, it creates a serious environmental and social problem and a strategic vulnerability for the West’s green goals. The West needs to find a balance between supporting Indonesia’s development and ensuring its own sustainability and security.

Source: Mining.com

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