Worries grow for Sulawesi farmers as nickel mining company plans expansion

LOEHA RAYA, Indonesia — The road to the headquarters of the Loeha Raya Farmers’ Cooperative is inundated from the monsoon, and a baby cayman splashes around in a puddle formed in a natural crater by the side of the road. The forests surrounding the adjacent Lake Towuti, the second-largest freshwater lake in Indonesia, are rich in plant and animal life only found here on the island of Sulawesi. They include the crested hornbill, babirusa “deer-pig” and spectral tarsier, one of the smallest and most endangered primates on the planet.

A land cruiser pulls up to the entrance of the farmhouse, and Rahman steps down to retrieve several 20-kilo (44-pound) sacks of freshly harvested produce from the trunk. Inside the sacks is one of Sulawesi’s most valuable agricultural commodities, the white peppercorn. Rahman, who is of Torajan and Padoe ethnicities, is recognized by his community as one of the main ancestral landholders in this part of Indonesia’s South Sulawesi province.

Rahman’s land and the surrounding forest of Loeha Raya, a group of five villages to the east of Lake Towuti, sit within the longest-operating nickel mining concession in Indonesia, the Sorowako Block, operated by PT Vale Indonesia. The onsite smelter and processing facilities were inaugurated in 1968 by then-President Suharto. Today, the block sprawls over 70,566 hectares (174,000 acres) of rainforest and farmland on the lake’s shores.

In 2024, Indonesia extended PT Vale Indonesia’s license until 2035. Now the company is looking to expand its operations within the concession, amid an explosion in global demand for nickel used in electric vehicle batteries as part of the green energy transition.

Indonesia has the world’s largest nickel reserves and is positioning itself as a key exporter of the commodity, with Sulawesi at the center of the boom. But Rahman and his fellow farmers worry that PT Vale Indonesia’s advance will mean the annexation and destruction of their farms and forest. In early 2024, locals began finding PT Vale Indonesia boreholes and marker posts for drilling and exploration sites.

“We are very worried about the company expanding mining here,” Lismar, a pepper farmer who said he was deeply disturbed to find company employees drilling near his farm in Rante Angin village, tells Mongabay. “When there is drilling exploration, people are afraid to farm.”

The company confirmed it was looking for new mine sites, telling Mongabay in a written statement that it had carried out exploratory drilling “at targeted hill sites (1,831 boreholes)” since 2022. It did not deny claims that drilling had taken place in peppercorn farming areas, though it argued that many of the farms were unlicensed.

Besides the Sorowako Block, PT Vale Indonesia controls the Pomalaa Block in Southeast Sulawesi province and the Bahodopi Block in Central Sulawesi province. The three concessions span a total of 118,000 hectares (292,000 acres). The company considers 48% of that area, much of which is currently zoned as forestland, to be “mineable”.

In the Sorowako Block, PT Vale Indonesia has identified 14,137 hectares (35,000 acres) of “key biodiversity areas” within areas it says are mineable. More than 5,000 hectares (12,350 acres) of that falls within the Lake Towuti area.

The company says it acknowledges concerns about deforestation and biodiversity loss in Loeha Raya and that it will “develop a biodiversity management plan aimed at achieving no net loss and exploring the possibility of a net-positive impact.”

Civil society observers, however, remain unconvinced. A 2024 analysis by NGO Mighty Earth ranks the company’s Sorowako operation first among Indonesia’s nickel mines causing the highest deforestation, with 14,559 hectares (36,000 acres) of tree cover loss recorded in 2014-2022. This is almost six times higher than any other nickel concession in the country. The Pomala and Bahodopi blocks sit at fourth and fifth on the list, respectively.

A report by WWF documented that Indonesia is responsible for the highest amount of mining-related deforestation (by all metals) globally, at 3,537 square kilometers (1,365 square miles), more than double any other country. The report notes that 61.5% of this deforestation has occurred since 2010. Combined with other analysis and available figures concerning deforestation from nickel mining, this suggests PT Vale Indonesia has caused one of the highest — if not the highest — levels of nickel mining-related deforestation in the world within the last 15 years.

The trend shows no signs of slowing, with Mighty Earth telling Mongabay it detected 1,800 hectares of tree cover loss in the Sorowako Block in 2024-25, up from 1,400 hectares of tree cover loss there during 2020-23.

“Our analysis of 329 mining concessions in Indonesia shows that over half a million hectares of forest are at risk from nickel mining expansion,” says Thea Parsons, forest commodities manager at Mighty Earth. “More nickel cannot come at the expense of forests, rivers and seas, and people’s lives and livelihoods.”

Nickel rush

Peppercorn farming on Lake Towuti has provided lucrative income for local communities over the past 20 years. But PT Vale Indonesia isn’t the only mining company in the area. Over the past year, at least five other nickel mining firms have begun operating on the lake’s periphery, according to data from Indonesia’s mining ministry.

In the district of Rante Angin farther north along the shores of Lake Towuti, Mongabay met over a dozen farmers who make a living sowing peppercorn on the ancestral lands of Rahman and other customary landholders. Some are economic migrants who came years ago from neighboring North Luwu district. According to a 2023 study, there are more than 3,500 farmers in Loeha Raya, 80% of whom farm peppercorn across a total of nearly 6,000 hectares (14,900 acres). Population data from Indonesia’s statistics agency indicates Loeha Raya is home to nearly 8,100 people.

The minerals in the soil provide optimum conditions for growing white peppercorn. Peppercorn trees are generally productive from 4-10 years old, but locals say there are trees 25-50 years old and still producing. The price of white peppercorn has fluctuated considerably over the last decade but is presently high.

Mining has impacted their farming, locals say, with freshwater contaminated by sedimentation around the nickel ore where drilling occurs.

“Spring water is contaminated, and then we can’t farm anymore,” Lismar says. “The Indonesian government supports the company, not the people.”

Assisted by NGOs, the Loeha Raya farmers have written several letters to PT Vale Indonesia shareholders since 2023. One alleges a lack of consultation, forced evictions and insufficient compensation for involuntary resettlement caused by the company’s expansion, as well as recent reports that identified toxic levels of hexavalent chromium in local water sources.

PT Vale Indonesia denies allegations of water contamination. “Environmental assessments and water sampling analyzed by accredited laboratories indicate that parameters remain within national regulatory thresholds,” it tells Mongabay. The company recently contracted a third party to investigate concerns regarding human rights, forced evictions, water, livelihoods and inconsistencies in the resettlement process, in response to the open letters to its shareholders. The report did not find evidence of hexavalent chromium exceeding the legal threshold.

Peppercorn farming in Sulawesi has also caused deforestation, if on a far smaller scale than deforestation from nickel mining.

Salam, 54, who came here from North Sulawesi 10 years ago and now has a farm of 1,200 peppercorn trees, says farmers previously never realized that lands zoned as state forest were off-limits. They now say they can coexist with the mining firms and restore the forest together. Community members recently sent a petition to PT Vale Indonesia requesting that 17,000 hectares (42,000 acres) in the concession be set aside for farming communities.

“We want to invite the community to work in the forest to help restore it,” Salam says. “Then we can try to plant fruit trees, avocados. And rehabilitate the land, but do it in a legitimate way, with the support of the government.”

PT Vale Indonesia says it acknowledges the community’s request and livelihood concerns, but that many of the pepper farms are operating without formal land titles within the concession.

Indeed, Salam says, the problem is that “most farmers in the area don’t have land titles and certificates.”

No protection for customary and ancestral lands

In 2013, Indonesia’s Constitutional Court ruled that Indigenous peoples’ customary forests belonged to them and not the state. But progress implementing the ruling and recognizing the rights of Indonesia’s hundreds of Indigenous communities has proceeded extremely slowly.

The Ancestral Domain Registration Agency (BRWA), an independent initiative established by NGOs to guide the nation’s Indigenous groups in mapping their territories, says the vast majority of land tenure claims have stalled in the verification process, a precursor to certification. According to BRWA data, as of last September, only 7.5% of all customary and ancestral lands in Indonesia — 2.5 million hectares (6 million acres) out of a total of some 31 million hectares (76.6 million acres) — have been certified. More than half of all customary and ancestral lands — 16 million hectares (39.4 million acres) — remain in the initial registration phase.

BRWA says the verification process demands historical documentation concerning ancestral land tenures but also requires local government backing and support, which is often lacking. Many of these claims come directly into conflict with the government’s agenda to develop the mining industry for critical minerals, particularly nickel and cobalt.

The BRWA database shows that a registration request in Sorowako was first submitted in 2015, seeking recognition of some 28,000 hectares (69,000 acres). But it did not proceed to the verification stage, and the BRWA was unable to provide any further details on the process. The Sorowako customary land requests start just north of the town of Asuli, cover most of the southern shore of Lake Matano and extend to the western edge of Lake Mahalona. However, there are no pending registration applications within the Loeha Raya area, according to BRWA data.

PT Vale Indonesia says that while it acknowledges the BRWA-registered claims near the concession, BRWA registration does not constitute legal recognition under Indonesian law. “In East Luwu, there is currently no formal recognition of customary land through local regulations or decrees,” the company says. “These claims remain under government verification.”

However, PT Vale Indonesia recently signed up its Sorowako mine to the Initiative for Responsible Mining Assurance (IRMA) standard, largely in response to pressure from civil society and downstream electric vehicle manufacturers, several of whom sit on IRMA’s board. IRMA requires mining companies to demonstrate the steps they have taken to obtain consent from Indigenous peoples and customary landholders, irrespective of Indonesia’s domestic legal framework.

Rahman and the farming communities of Loeha Raya and the Indonesian NGO Walhi say locals were not given prior notice or consultation about the mines. WALHI and the Loeha Raya Farmers’ Cooperative say that initial consultations held in 2023 were closed door, held a 20-hour drive away in the Sulawesi regional capital of Makassar, did not invite women’s farming cooperative groups and were held in the presence of military personnel, who had previously harassed some of the local farming communities.

Together with NGOs, the local organizations have documented how consultation has fallen short of the International Finance Corporation’s performance standards concerning involuntary resettlement. PT Vale Indonesia announced another round of local community consultations in November 2025, ahead of the IRMA audit period.

Historical impacts of mining and deforestation around Asuli

The majority of the historical forest clearance took place around Asuli, a town near the original open-pit mines and smelting machinery. Most of the involuntary resettlement and forced evictions to date, locals say, have also taken place here.

While farmers like Salam and Rahman continue to earn their livelihoods, others are not so fortunate. Fatahuddin, a 68-year-old grandfather of four, recounted his experience being evicted from his pepper farm in 2018.

“I had 2 hectares [5 acres] of land and 700 pepper trees — until this day I have not received any compensation,” Fatahuddin tells Mongabay on a small patch of land on near Asuli on the other side of Lake Towuti, where he lives in a small farming allotment in a wooden hut.

Fatahuddin worked for PT Vale Indonesia for 26 years in its processing plant. He retired but later turned to farming in Asuli for additional income. But he says he was later evicted from the farm by the same company he had worked for most of his career.

Interviews with other local farmers and rightsholders indicate that more than 100 people received 50 million rupiah ($3,000) in compensation. PT Vale Indonesia began mining in the farming area in 2019.

“I had to sell my old house in Wawondula city so I could buy land from a villager for farming for 54 million rupiah [$3,200],” Fathuddin says. “With that money, all you can buy is a small shop or hut in a small field.”

Fatahuddin is one of several individuals Mongabay met with who say they never received any compensation for their land and houses.

“Now I’m only planting cassava and only have a third of a hectare,” Fatahuddin says. “I am a poor villager now.”

PT Vale Indonesia says the compensation provided was the result of direct negotiations between it and the affected individuals and agreed upon through a mutual consensus based on asset verification, livelihood sustainability considerations and with the knowledge and facilitation of local government authorities.

In a recent “response and action plan” published by the firm in response to an independent human rights report that they commissioned, PT Vale Indonesia made renewed commitments to “develop a transparent and consistent compensation framework … and review all payments and remediate any loss of livelihoods.”

A large proportion of the nickel matte produced by PT Vale Indonesia goes to Vale Canada and the Sumitomo Metal Mining Corporation in Japan. There it is processed into cathode materials, and sold on to battery manufacturer Panasonic, and to Tesla and other automobile manufacturers that have long-term offtake agreements.

The forthcoming EU Battery Regulation legally requires human rights and environmental due diligence, including on the status of Indigenous peoples and customary landholders, inthe mining of nickel, cobalt, lithium and graphite. It alsomandates the use of battery passports to trace embedded deforestation, and the social and environmental footprint of batteries that originate at mines like PT Vale Indonesia Sorowako Block. Indonesia is also looking at the introduction of its own human rights due diligence law.

As Indonesia seeks to become a battery and critical minerals superpower, time will tell which solutions prove to be the most sustainable and just.

Banner image: Salam came here from North Sulawesi 10 years ago and now has a farm of 1,200 peppercorn trees. Image by Richard Kent for Mongabay.

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Philip Jacobson Editor

This story first appeared on Mongabay

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