Please zoom in or out and select the base layer according to your preference to make the map ready for printing, then press the Print button above.

Nickel rush threatens the health and environment of Obi Island's people, Indonesia


Description:

Since 2008, the development of nickel mines and the opening of two smelters and coal-fired power plants has dramatically changed the village of Kawasi in Obi Island [1][2][3]. In just 14 years, a community that was living without electricity and mainly reliant on fisheries has been industrialised and is now suffering the impacts of mining and smelter pollution [4]. The local population already reports increased levels of respiratory infections and is concerned for the safety of their drinking water and the state of local fisheries [1][4]. 

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].

Basic Data

Name of conflict:Nickel rush threatens the health and environment of Obi Island's people, Indonesia
Country:Indonesia
State or province:North Maluku
Location of conflict:Kawasi, Obi, South Halmahera Regency
Accuracy of locationHIGH (Local level)

Source of Conflict

Type of conflict. 1st level:Mineral Ores and Building Materials Extraction
Type of conflict. 2nd level:Tailings from mines
Thermal power plants
Metal refineries
Mineral processing
Aquaculture and fisheries
Specific commodities:Nickel and Cobalt

Project Details and Actors

Project details

In 2008, mining operations began in Obi Island after South Halmahera Regent issued exploration permits for nickel mining [1]. At the Kawassi site two subsidiaries of the Harita Group, PT Trimegah Bangun Persada (TBP) and PT Gane Permai Sentosa (GPS) operate mines and extract limonite and saprolite ore containing low concentrations of nickel (<1.6%) [2][3]. The mines have a governmental permit to dump 6 million tons of waste into the ocean each year [19].

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].

Project area:1,924
Level of Investment for the conflictive project1,370,000,000
Type of populationRural
Affected Population:4,000
Start of the conflict:01/01/2008
Company names or state enterprises:Lygend Resources & Technology Co. from China - Joint owner (36.9%) of the HPAL refinery
XinXing Qiyun Investment Pte Ltd from Singapore - Joint 80% owner of Megah Surya Pertiwi Smelter
Harita Group from Indonesia - Harita Nickel, a subsidiary of Harita Group, owns and operates the nickel mines; it owns 20% of the Megah Surya Pertiwi smelter; and 63.1% the HPAL smelter.
GEM Co., Ltd. (GEM) from China - Buys the battery-grade nickel and cobalt from the HPAL smelter in Kawassi
Beijing Easpring Technology Material Co., Ltd. (Easpring) from China - Buys the battery-grade nickel and cobalt from the HPAL smelter in Kawassi
Relevant government actors:Ministry of Maritime Affairs and Fisheries (KKP), Government of Indonesia
Ministry of Environment and Forestry (KLHK), Government of Indonesia
Coordinating Ministry for Maritime Affairs and Investment (KKBKI), Government of Indonesia
International and Finance InstitutionsOCBC Bank Singapore (OCBC) from Singapore - Part of investment consurtium providing $625m for HPAL smelter
United Overseas Bank (UOB) from Singapore - Part of investment consurtium providing $625m for HPAL smelter
Bank Negara Indonesia (BNI) from Indonesia - Part of investment consurtium providing $625m for HPAL smelter
DBS Bank Singapore (DBS) from Singapore - Part of investment consurtium providing $625m for HPAL smelter
Bank Mandiri from Indonesia - Part of investment consurtium providing $625m for HPAL smelter
BNP Paribas (BNP) from France - Part of investment consurtium providing $625m for HPAL smelter
Bank Central Asia (BCA) from Indonesia - Part of investment consurtium providing $625m for HPAL smelter
Maybank from Malaysia - Part of investment consurtium providing $625m for HPAL smelter
Oversea-Chinese Banking Corporation (OCBC) from Singapore - Part of investment consurtium providing $625m for HPAL smelter
OCBC NISP from Indonesia - Part of investment consurtium providing $625m for HPAL smelter
Environmental justice organizations (and other supporters) and their websites, if available:Front Perjuangan Rakyat Obi (FPRO) [Obi People's Struggle Front]

Jaringan Advokasi Tambang Sulawesi Tengah (JATAM Sulteng) [Mining Advocacy Network Central Sulawesi]
https://jatamsulteng.org/

Aksi Ekologi & Emannsipasi Rakyat [Action for Ecology and People’s Emancipation]
http://aeer.info/en/

Koalisi Rakyat untuk Keadilan Perikanan (KIARA) [People's Coalition for Fisheries Justice]
https://www.kiara.or.id/

Wahana Lingkungan Hidup Indonesia (Walhi) [Indonesian Forum for the Environment] - Friends Of the Eartg affiliate
https://www.walhi.or.id/

Conflict & Mobilization

IntensityMEDIUM (street protests, visible mobilization)
Reaction stageIn REACTION to the implementation (during construction or operation)
Groups mobilizing:Local ejos
Neighbours/citizens/communities
Social movements
Women
Local scientists/professionals
Fisher people
Forms of mobilization:Community-based participative research (popular epidemiology studies, etc..)
Development of a network/collective action
Involvement of national and international NGOs
Media based activism/alternative media
Official complaint letters and petitions
Public campaigns
Street protest/marches

Impacts

Environmental ImpactsVisible: Loss of landscape/aesthetic degradation, Deforestation and loss of vegetation cover, Surface water pollution / Decreasing water (physico-chemical, biological) quality, Groundwater pollution or depletion, Mine tailing spills, Global warming, Food insecurity (crop damage)
Potential: Biodiversity loss (wildlife, agro-diversity), Reduced ecological / hydrological connectivity, Air pollution
Other Environmental impactsDangerous levels of hexavalent chromium (Cr6) present in drinking water (Visible)
Decrease in fisheries (Visible)
Health ImpactsVisible: Infectious diseases
Potential: Exposure to unknown or uncertain complex risks (radiation, etc…)
Other Health impactsElevated levels of lung infection, especially in newborns and todlers (Visible)
Socio-economical ImpactsPotential: Loss of traditional knowledge/practices/cultures, Loss of livelihood

Outcome

Project StatusIn operation
Conflict outcome / response:The project operator has pledged to stop dumping waste into the sea, and instead clear a forest in the island for a tailing dam. Campaigners say is not a better solution. [19]
Do you consider this an environmental justice success? Was environmental justice served?:No
Briefly explain:Nothing has notably changed in Kawassi and the industry continues operating and planing to expand the project with additional smelters.

Sources & Materials

References to published books, academic articles, movies or published documentaries

[30] Amin, R., Edraki, M., Mulligan, D. R., & Gultom, T. H. (2015). Chromium and nickel accumulation in the macrophytes of the [30] Kawasi wetland on Obi Island, North Maluku Province, Indonesia. Australian Journal of Botany, 63(7), 549-553.
https://www.publish.csiro.au/BT/BT15066

[31] Hartono, B., Utomo, S. W., Kusnoputranto, H., Timanta, A. E., Husna, L. N., & Haryanto, J. (2018). Health Risk Analysis of Nickel and Lead Exposure in Drinking Water at Kawasi Village, Obi Island, South Halmahera District, 2015. Asian Journal of Applied Sciences, 6(1).
https://192.99.73.24/index.php/AJAS/article/view/5199

[32] Aris, M., & Tamrin, T. (2020). Heavy Metal (Ni, Fe) Concentration in Water and Histopathological of Marine Fish in the Obi Island, Indonesia. Jurnal Ilmiah PLATAX, 8(2), 221-233.
https://ejournal.unsrat.ac.id/index.php/platax/article/view/30673

[1] Kawasi Muddied by Nickel, Bagja Hidayat and Dini Pramita - Tempo, 07/02/2022
https://pulitzercenter.org/stories/kawasi-muddied-nickel

[2] Indonesia nickel industry boost as Hamlahera Persada Lygend’s Obi HPAL plant heading towards full production in May, Paul Moore - International Mining, 30/04/2021
https://im-mining.com/2021/04/30/indonesia-nickel-industry-boost-hamlahera-persada-lygends-obi-hpal-plant-heading-towards-full-production-may/

[3] Halmahera Persada Lygend (HPAL smelter) corporate website - Visited on 25/02/2022
https://www.hpalnickel.com/

[4] ‘We are afraid’: Erin Brockovich pollutant linked to global electric car boom, Febriana Firdaus and Tom Levitt - The Guardian, 19/02/2022
https://www.theguardian.com/global-development/2022/feb/19/we-are-afraid-erin-brockovich-pollutant-linked-to-global-electric-car-boom

[5] Jatam dan Kiara: Pemerintah, Jangan Izinkan Perusahaan Buang Tailing ke Laut, Della Syahni - Mongabay Indonesia, 12/03/2020

[Jatam and Kiara: Government, Don't Allow Companies to Dispose of Tailings into the Sea]
https://www.mongabay.co.id/2020/03/12/jatam-dan-kiara-pemerintah-jangan-izinkan-perusahaan-buang-tailing-ke-laut/

[6] Hyundai names SK and CATL as suppliers for 3rd batch of batteries for E-GMP, Stan Lee - TheElec, 22/02/2021
http://www.thelec.net/news/articleView.html?idxno=2405

[7] China's CATL to supply Honda with EV batteries through 2027, Keiichi Furukawa - Nikkei Asia, 06/02/2019
https://asia.nikkei.com/Business/Business-deals/China-s-CATL-to-supply-Honda-with-EV-batteries-through-2027

[8] Electric cars: China’s battle for the battery market, Henry Sanderson, Tom Hancock and Leo Lewis - The Financial Times, 05/03/2017
https://www.ft.com/content/8c94a2f6-fdcd-11e6-8d8e-a5e3738f9ae4

[9] Battery Maker Helping Power China Electric Car Boom Plans IPO, Jie Ma - Bloomberg, 01/09/2016
http://www.bloomberg.com/news/articles/2016-09-01/battery-maker-helping-power-china-electric-car-boom-plans-ipo

[10] Beijing Easpring Technology Material Co., Ltd. Corporate Website - Visited on 25/02/2022
http://www.easpring.com.cn/

[11] GEM Co., Ltd. Corporate website - Visited on 25/02/2022
http://en.gem.com.cn/en/AboutTheGroup/index.html

[12] Nickel Market Intelligence, Raw Material Outlook - Visited on 25/02/2022
https://www.rawmaterialoutlook.org/nickel

[13] Indonesia’s Nickel Industrial Strategy, Isabelle Huber - Center for Strategic & International Studies, 08/12/2021
https://www.csis.org/analysis/indonesias-nickel-industrial-strategy

[14] Indonesia promised to protect the ocean from mine waste, but risky regulation threatens to undermine its commitment, Aksi Ekologi & Emannsipasi Rakyat (AEER) [Action for Ecology and People’s Emancipation] - 27/05/2021
http://aeer.info/en/indonesia-promised-to-protect-the-ocean-from-mine-waste-but-risky-regulation-threatens-to-undermine-its-commitment/

[15] Initiative for Responsible Mining Assurance Member List - Visited on 25/02/2022
https://responsiblemining.net/members-partners/#irma-member-list

[16] Initiative for Responsible Mining Assurance Mission - Visited on 25/02/2022
https://responsiblemining.net/about/about-us/

[17] PT Halmahera Persada Lygend Nickel Smelter power station, Global Energy Monitor Wiki - Visited on 25/02/2022
https://www.gem.wiki/PT_Halmahera_Persada_Lygend_Nickel_Smelter_power_station

[18] MSP Pulau Obi Power Station, Global Energy Monitor Wiki - Visited on 25/02/2022
https://www.gem.wiki/MSP_Pulau_Obi_power_station

[19] Red seas and no fish: Nickel mining takes its toll on Indonesia’s spice islands, Rabul Sawal - Mongabay, 16/02/2022
https://news.mongabay.com/2022/02/red-seas-and-no-fish-nickel-mining-takes-its-toll-on-indonesias-spice-islands/

[20] Exclusive: Facing green pressure, Indonesia halts deep-sea mining disposal, Fransiska Nangoy and Fathin Ungku - Reuters, 05/02/2021
https://www.reuters.com/article/us-indonesia-mining-environment-exclusiv-idUSKBN2A50UV

[21] China's Lygend starts milestone nickel project in Indonesia, Tom Daly, Min Zhang and Mai Nguyen - Reuters 18/05/2021
https://www.reuters.com/article/indonesia-nickel-lygend-idUSL2N2N60XR

[22] HARITA Operasikan Lini Produksi Kedua Untuk Pemurnian Nikel, Ani Bagu - KabaRpublik, 17/12/2021

[HARITA Operates Second Production Line For Nickel Refining]
https://kabarpublik.id/harita-operasikan-lini-produksi-kedua-untuk-pemurnian-nikel/2021/12/17/

[23] Harita Group Breaks Ground for $320m Nickel Smelter on N. Maluku - JakartaGlobe, 12/06/2015
https://jakartaglobe.id/context/harita-group-starts-construction-of-320m-smelter-in-north-maluku

[24] Harita Group Takes Chinese Investor to Build Smelter - Tempo.Co, 15/06/2015
https://en.tempo.co/read/675204/harita-group-takes-chinese-investor-to-build-smelter

[25] Nickel mining resisted in Indonesia, Hans Nicholas Jong - China Dialogue, 12/12/2019
https://chinadialogue.net/en/business/11727-nickel-mining-resisted-in-indonesia-2/

[26] The chemical charging of HPAL supporting sulfuric acid project 1# system unit has been started successfully - Lygend Resources & Technology Co., 12/05/2021
http://www.lygend.com/media/121.html

[27] Lygend Resources & Technology Co. Corporate Website - Visited on 25/02/2022
http://www.lygend.com/industry.html?l=en-us

[28] DBS launches USD 625 million financing structure for PT Halmahera Persada Lygend, Indonesia’s first high pressure acid leach smelter, DBS press release - 01/04/2021
https://www.dbs.com/newsroom/DBS_launches_USD_625_million_financing_structure_for_PT_Halmahera_Persada_Lygend_Indonesias_first_high_pressure_acid_leach_smelter

[29] GEM: China's Easpring to buy nickel, cobalt chemicals from Lygend project in Indonesia, Tom Daly - Market Screener, 02/04/2021
https://www.marketscreener.com/quote/stock/GEM-CO-LTD-6605918/news/GEM-China-s-Easpring-to-buy-nickel-cobalt-chemicals-from-Lygend-project-in-Indonesia-32357458/

Related media links to videos, campaigns, social network

[33] Save Ruang Hidup Rakyat Peisisir Laut dan Pulau-Pulau Kecil [Save the Living Space of the People of the Sea Coast and Small Islands] - FRONT PERJUANGAN RAKYAT OBI (FPRO), 18/03/2020
https://www.youtube.com/watch?v=5yBXXiuJWco

Meta information

Last update15/07/2022
Conflict ID:5827

Images

 

The waters off the southern coast of Obi Island have turned red due to pollution from the nickel mines and smelters.

Credit: Rabul Sawal for Mongabay Indonesia. Photo retrieved from: https://news.mongabay.com/2022/02/red-seas-and-no-fish-nickel-mining-takes-its-toll-on-indonesias-spice-islands/

Satellite Image Timeline

Retrieved from GoogleEarth, own composition

The waters off the southern coast of Obi Island have turned red due to pollution from the nickel mines and smelters.

Photograph by Rabul Sawal/Mongabay Indonesia.

Protest by Front Perjuangan Rakyat Obi (FPRO) [Obi People's Struggle Front]

The banner reads: "Maluku Utara Bukan Toilet. Hentikan Tambang Dan Proyek Pembungan Tailing Di Kepulauan Rempah-Rempah" ["North Maluku is not a toilet. Stop Mines And Tailing Projects In The Spice Islands "]

Land and forest around Kawasi are occupied by the mining company

Photograph: Adlun Fiqri Pramadhani/The Guardian