Indonesian nickel project harms environment and human rights, report says

JAKARTA — A massive nickel mining and processing project on the Indonesian island of Halmahera has cleared thousands of hectares of forest, forcefully displaced local people, and polluted the rivers and sea, devastating the lives of many Indigenous people in the process, a new report says.

Climate Rights International (CRI), a U.S.-based nonprofit, interviewed 45 people living near the mining and smelting operations at the Indonesia Weda Bay Industrial Park (IWIP) for the report. Some, like Maklon Lobe, an Indigenous Sawai farmer, complained of their rights being violated from the very beginning, during the land acquisition process.

Others told CRI they weren’t informed about the purpose of land acquisition or given any details of the project by any of the mining or smelting companies now operating in the park. This violates legal requirements that companies acquire the free, prior and informed consent (FPIC) of affected communities prior to the approval of any project, according to CRI researcher Krista Shennum.

“Locals say their lands have been grabbed. They’re unable to negotiate land price, and they’re intimidated by police to sell their lands,” she said at the launch of the report in Jakarta on January 17, 2024.

Land acquisition was just one of the problem areas reported by locals in CRI’s report. They also complained of the deforestation of their traditional hunting grounds, the pollution of the rivers on which they depend for water, and the discharge of hot water directly into the sea, killing the fish they eat.

‘They excavated my land without my consent’

Maklon, the farmer, held legal title to 38 hectares (94 acres) of land where he grew cacao, sago and nutmeg trees. When the IWIP developers — a consortium of the Chinese companies Tsingshan Group (with a 40% stake), Huayou Group (30%) and Zhenshi Group (30%) — sought to buy his land, they offered him just 15% of his asking price, and only for 8 hectares (20 acres). He said he refused, repeatedly, and was subsequently subjected to “countless visits” by police demanding to know why he was still holding out, according to the report.

When Maklon eventually agreed to sell, it was at a meeting hosted at the local police station, with the developers also offering to pay for his children’s university education. By then, the developers had already cut down his trees, blocked off his access to his own land, and begun excavating it.

At the end, they paid him for just 8 of the 38 hectares, at a price lower than was agreed on, Maklon said.

“They said that the rest of the money was paid to someone else who claimed they owned the land,” he said in the report. “The company excavated my land without my consent while I owned it.”

In January 2023, Maklon filed a lawsuit against IWIP over the deal. He said he feared this move might affect his family, including his six children; he told of hearing reports about other children being cut off from government services because of their parents’ opposition to IWIP.

“We don’t want our children to be affected. We could win, but it could affect our children,” Maklon said. “IWIP has many tentacles.”

Deforestation in the name of clean energy

The 5,000-hectare (nearly 12,400-acre) IWIP estate is at the vanguard of an Indonesian government policy centered around the nickel industry. The country is the biggest producer of this metal, which is a key component in the batteries used in electric vehicles and energy storage applications.

The government has billed its nickel policy as a push toward building a clean-energy future. But on islands like Halmahera, mining and processing of the metal is driving deforestation and pollution.

At least 5,331 hectares (13,173 acres) of forest have been cleared within nickel mining concessions on Halmahera, according to geospatial analysis by CRI and the AI Research Climate Initiative at the University of California, Berkeley.

For local community members like Arkipus Kone, 56, the livelihood impact has been dramatic. The CRI report described how Arkipus, a traditional bushmeat hunter, would walk for up to 10 hours into the island’s forested interior to hunt, staying there for weeks at a time before returning home with boars or deer.

His hunts have been less successful in recent years, he said, blaming it on the deforestation linked to nickel mining.

“Because of the mining, it is rare to catch something. Before, I used to get 1 deer and 1 boar per day. Yesterday, I got nothing. It’s getting rarer,” he told CRI.

Another community member, Felix Naik, 65, said the deforestation has polluted the small river on which he had always depended for water.

“There is deforestation on the river upstream. So if it rains, the river turns dark brown and muddy,” Felix said, adding he avoids using the water from the river and has had to dig three wells to survive. He also buys bottled water by the gallon every two to three days.

‘The sea is dirtier than before’

Then there are the coal-fired power plants built specifically to serve the energy-hungry industrial estate and mines. IWIP has already built 11 such plants, with another three in the pipeline, according to data from the Global Energy Monitor. Once fully operational, these plants will burn through more coal than entire countries like Spain or Brazil.

The plants are reportedly dumping huge volumes of hot water — the discharge form their cooling systems — directly into the sea

“The sea is dirtier than before,” Hersina Loha, a 56-year-old fisher, told CRI. “I often see the waste from IWIP at the sea. All the fish near IWIP are dead, I see them floating, quite often. I think it’s due to the hot water that came from the coal power plant. That’s because they dumped the hot water directly into the sea.”

Hersina also reported encountering an “oil-like sludge” while out on her boat. “I don’t know what they are throwing into the sea, but I think it’s harmful to fish or maybe even us,” she said, adding that her catch was declining.

The various allegations by the affected community members interviewed by CRI centered around the activities of three of the many mining companies operating in Halmahera: PT Weda Bay Nickel (WBN), PT First Pacific Mining, and PT Mega Haltim Mineral.

With a concession of 45,065 hectares (111,358 acres), WBN is the largest nickel miner on Halmahera and has the second-largest nickel concession in Indonesia. It also has the largest deforestation footprint, at 1,456 hectares (3,600 acres) of forest loss in its concession as of 2022. WBN is a joint venture between Indonesian state-owned miner PT Antam and Singapore-based Strand Minerals. Strand is itself a joint venture of Tsingshan, which holds a 57% stake, and French miner Eramet, which holds the other 43%.

CRI wrote to Eramet, Tsingshan and WBN to ask how they compensated landowners, including Indigenous people, for their customary lands. CRI didn’t receive a response from either Tsingshan or WBN, but Eramet said WBN had obtained a permit to exploit its concession, which is located in a forested area.

To obtain the permit, WBN had to meet stringent requirements on compensation, rehabilitation, revegetation, and relinquishment, Eramet said. It added that local communities don’t have legal or customary ownership of the land in the forested areas.

Recommendations for stakeholders

CRI issued a number of recommendations to all stakeholders, from IWIP and all the mining and smelting companies in Halmahera, to the Indonesian government, to the EV companies potentially sourcing their nickel from IWIP. Automakers such as Tesla, Volkswagen and Ford have trade agreements with nickel producers that have operations at IWIP.

CRI called on IWIP and the mining and smelting companies to fully and fairly compensate all community members with land conflicts, and to minimize air, water, and soil pollution from industrial activities. It also urged them to immediately stop the construction of all new coal plants at the industrial park.

It added that companies like Tesla and Ford can leverage their buying power to pressure mines, mineral processors and suppliers to change their practices that cause environmental or human rights harms.

As for the Indonesian government, CRI urged policymakers to stop issuing permits for new coal plants, and to ensure that mining, smelting and related activities don’t lead to environmental harm and human rights abuses.

“What we see is that the Indonesian government is not standing up [for affected communities],” said CRI executive director Brad Adams. “They seem to be more aligned with big companies.”

The government should also hold company representatives to account for any violations of individual and community rights, CRI said.

“There is no company that can operate in Indonesia without government permission and it’s always the government responsibility to hold those companies accountable,” Adams said. “So accountability starts with the government.”

Banner image: An aerial view of the Indonesia Weda Bay Industrial Park (IWIP), including captive coal plants and nickel smelting operations. Image courtesy of Muhammad Fadli for CRI.

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