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A broader look at today’s business Sunday, July 21, 2024 Vol. 19 No. 278
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METALS MANIA
INDONESIA’S MASSIVE METALS BUILD-OUT IS FELLING THE FOREST FOR BATTERIES
A BOAT cruises past the Indonesia Weda Bay Industrial Park in Central Halmahera, North Maluku province, Indonesia, on June 8, 2024. Indonesia has been building out a vast industry for nickel. AP/ACHMAD IBRAHIM
By Victoria Milko, Ed Davey & Camille Fassett
L
The Associated Press
ELILEF SAWAI, Indonesia—On a steep trek up to his forest farm on the Indonesian island of Halmahera, Librek Loha let out a cry of dismay. “Aduuuuh,” he said, his voice trailing off.
“Landslides, again. They happen all the time now.” The mudslide below Loha’s plantings of cacao, nutmeg and pineapple have exposed more orange, rocky soil—adding to miles of bulldozed forest and river that are leaving the farm an island of green amid red-brown. Where trees once grew, there are dusty warehouses, mountains of black coal and water that runs silty brown. This region of Weda Bay is now one of the world’s largest nickel production facilities. Fiery smelters and multiple coal-fired power
plants burn nonstop to refine nickel ore into material for batteries and steel. Indonesia aims to dominate the world’s nickel supply, and it’s succeeding. The country has gone from having two nickel smelters to 27 over the last 10 years, with 22 more planned, according to S&P Global Commodity Insights. Last year, the country was responsible for more than half the supply of nickel ore globally. The metal was once known mainly for making stainless steel; now demand has skyrocketed as automakers like
SATELLITE images show Lelilef Sawai, Indonesia, in 2016, left, and the same area in 2024 after building out a vast industry for nickel. PLANET LABS PBC VIA AP
Tesla need it for electric vehicle batteries and companies that make larger batteries need it for clean electricity projects. But where developers build out these vast nickel-processing plants, surrounding forest disap-
pears twice as fast, according to a new analysis by the Indonesian nonprofit Auriga. Indonesia has the largest reserves of nickel in the world. Until recently, it mostly sold its nickel deposits—ore—raw. It didn’t have
the processing plants to refine the metal. Then 10 years ago, Indonesian officials decided the country should stop selling its resources so cheaply and instead refine them, to provide employment and fetch higher pric-
es. A massive nickel buildout ensued. President Joko Widodo has bolstered this, co-locating nickel smelters with EV battery factories. In addition to the new smelters, coal power plants have sprung up to serve the miles of new industrial parks. Surrounding villages can see the well-lit nickel works while they live through regular power outages. Indonesia’s nickel ore lies in shallow deposits, easily accessible when the rainforest is cut down. The new analysis of rainforest loss, based on government data, shows deforestation rose from an average of 33 square kilometers (about 13 square miles) around each smelter, to 63 square kilometers (about 24.5 square miles). If all 22 new plants are built, deforestation is likely to increase dramatically. “The damage to the environment is devastating,“ said Timer Manurung, chairman of Auriga. “Deforestation has significantly Continued on A2
PESO EXCHANGE RATES Q US 58.2640 Q JAPAN 0.3703 Q UK 75.4344 Q HK 7.4606 Q CHINA 8.0231 Q SINGAPORE 43.3802 Q AUSTRALIA 39.0718 Q EU 63.5019 Q KOREA 0.0421 Q SAUDI ARABIA 15.5342 Source: BSP (July 19, 2024)