Melky Nahar, a campaigner with JATAM, explains the core of the conflict by denouncing that the Indonesian government is “concerned with the interests of mining companies, as well as companies engaged in refining processing, but ignore the future of the people on Obi Island” [5].

The accelerated industrialisation of what once was a remote rural island is the consequence of national and global trends that are sparking similar conflicts throughout the region [5]. The combination of a growing appetite for critical minerals of the global battery manufacturing industry, China’s domination of the nickel commodity chain, the expanding influence of its companies in Southeast Asia and Indonesia’s industrial development aspirations have led to the rapid development of mines and smelters all over the country in recent years.

Significantly, the two companies that have signed long-term agreements to purchase minerals from Kawasi’s largest smelter, Easpring and GEM, supply raw materials for battery manufacturers. Most notably, since GEM supplies CATL, the chinese-owned company that controls 30% of the global battery market, nickel from Kawasi will ultimately make its way to electric vehicles (EV) of brands including Mercedes-Benz, Volkswagen, BMW, Volvo, Tesla, Daimler, Toyota, Hyunday, Honda, MG, Roewe, Feifan, Beijing, Arcfox, Geometry, Zhidou, Zeekr, Lynk & Co, Maple and Trumpchi [4][6][7][8][9]. Both Easpring and GEM are highly aligned with the Chinese national agenda. Easpring's stated goal is to “contribute to the era of ecological civilization”, a concept enshrined in the Chinese constitution in 2012 [10]. In turn, GEM mentions that the 14th Five-year Plan tasks the company with “establishing a green supply chain [...] across the globe” following a development strategy focused on “urban mining and new energy materials” [11].

China dominates the nickel commodity chain and has the highest nickel smelting capacity worldwide. But since 2016, nickel smelting capacity has boomed in Indonesia, the country with the largest nickel reserves and mining output, and is closely approaching China’s output [12]. This nickel smelting rush has been mostly financed by Chinese companies and includes seven more HPAL refineries planned across Indonesia [13]. In turn, these investments are the result of Indonesia’s strategy of industrial development, including a nickel ore export ban in 2014, to gain added value selling the processed metal instead of the raw nickel ore [12][13]. In the long term, the government intends to drive economic growth and development by developing a domestic integrated EV supply chain, from mining and smelting, to manufacturing of batteries and cars [13].

But Indonesia faces a notable challenge in developing a domestic industry along the EV supply chain, chiefly its lax environmental regulations. Particularly, the EV industry market is notoriously demanding on social and environmental standards. In a bid to satisfy their customers, car-makers such as Ford, BMW and Daimler-Benz have joined the global Initiative for Responsible Mining Assurance to “protect people and the environment directly affected by mining” [14][15][16]. Accordingly, the promoters of the Kawasi project also boast their green credentials claiming they are “minimising the use of fossil energy sources in the production processes [...] through implementation of low emission technology” [3]. These claims contrast with the installation of a combined 720MW of coal-fired power to supply the smelting operations and the appalling environmental record reported by the local population and researchers on the ground [17][18].

Most strikingly, local campaigners denounce that the mines and refineries at Kawasi are dumping their waste products directly into the sea, in a practice known as deep sea tailing placement (DSTP) [14]. The practice is not unique to Kawasi and has been reported in other sites in Indonesia with the approval of the government. Campaigners denounce that such practice can have potentially devastating effects for wildlife in a biodiversity-rich area making “EV batteries part of the global ecology problem and contribute to new sources of coastal and marine pollution” [14].

The impacts of DSTP on the local environment are already taking a heavy toll on the daily lives of the local population. Kawasi fishermen report that the catches have significantly decreased and they have to sail further away to find fisheries to sustain their families. In addition, scientists have also reported dangerous levels of heavy metals in local fish and shells often consumed by villagers [19][32]. “My presumption is simply that the Kawasi Sea isn’t suitable anymore for wildlife … It’s turned into a mud puddle. So if the fishermen say they can’t find fish anymore, that’s because they’re gone. The people of Obi Island could die … from eating the contaminated fish” said Muhammad Aris, a co-author of the study and marine biologist at Khairun University.

Dangerous levels of contaminants, including the cancerogenic hexavalent chromium (Cr6), have also been found in drinking water supplies [4][30]. Local people are already denouncing that since the mines arrived they fall sick more often. The local midwife clinic has already reported 900 cases of potentially deadly acute respiratory infections among the 4000 inhabitants, a ratio that more than doubles the national average. Most of the reported cases have been in newborns and toddlers [4].

DSTP is a cheaper waste disposal alternative than tailing dams on land and the cost of nickel production would significantly increase if the Kawasi plants were to change its waste treatment practices [20]. The Chinese investors capacity to produce battery-grade nickel at record low monetary cost and time [21] is therefore reliant on imposing significant environmental costs to the local populations, all the while the government disregards environmental regulations with a central focus on GDP expansion [5]. The injustice is only made worse considering the political alienation denounced by Nurhayati, a Kuwassi woman leader: “The people heard that the pipe would be used for [sea] waste disposal, but we were never invited to talks” [1].

Environmental justice organisations have a radically different development proposal and advocate for alternative modes of investment. “Coastal communities who take care of natural resources and the environment so that there is no ecological crisis and destruction of biodiversity is [...] a big investment that their children and grandchildren can enjoy in the next 100 years, unlike a company investment that will only be enjoyed for a few years" - Ki Bagus Hadikusumo, Jatam campaigner [5].

In 2016, the Megah Surya Pertiwi Smelter was completed [22]. The smelter is a joint venture between Harita Group (20%) and two subsidiaries of Xinxing Ductile Iron Pipes Co., Ltd. (80%) and supposed an investment of $320m [23]. The smelter uses the Rotary Klin Submerged Arc Furnace (RK-SAF) technology to produce 190,000 tons/year of ferronickel (10-12% purification) [24] and can also process nickel ore from other mines in the region [23][25]. Ferronickel is used in the production of steel. The smelter is powered by a 114 MW coal-fired power plant [18][23].

In 2021, the first phase of a larger smelter was put online. This second smelter uses the High-Pressure Acid Leaching (HPAL) technology, which smelters nickel from ore applying sulphuric acid in high temperature high pressure chambers [3][26]. This technology gives an output of better quality than the first pyrometallurgical smelter, making nickel of sufficient quality to be used in the manufacturing of electric vehicle batteries [3]. A second phase of the smelter is expected to be put in operation on the third quarter of 2022 and a third phase in 2023 [27]. When the smelter is completed it will have capacity to produce 96,000 tons/year of mixed Ni/Co precipitate (MHP), 160,000 tons/year of nickel sulphate and 20,000 tons/year of cobalt sulphate [3]. The smelter is powered by a 600MW coal-fired power plant [17] and receives supplies of 5.05 million wet metric tonnes (WMT) of limonite ore and 158,000 WMT of saprolite ore from the local Harita Group mines [2].

The HPAL smelter is operated by PT Halmahera Persada Lygend, a joint venture between Harita Group (63.1%) and Lygend Resources & Technology Co. (36.9%) [17][21]. The project supposes a total investment of $1.05 billion, $625 million of which is financed by a consortium of 10 banks including the European BNP Paribas, Indonesian and Singaporean banks [21][28]. Lygend and Harita have already signed agreements to supply MHP, nickel and cobalt sulphate to GEM Co. and Beijing Easpring Material Technology Co., two chinese companies specialised in minerals for electric vehicle battery manufacturing [29].

Before 2024, PT Halmahera Jaya Feronikel, another joint venture of Lygend and Harita Group, planned to build a third smelting plant. This smelter will produce 280,000 tons/year of ferronickel using the Rotary Kiln-Electric Furnace (RKEF) technology [27].