Although China absorbs 72 % of Indonesia’s HS‑75 nickel exports for batteries, this semi-processed nickel is further refined by Chinese companies such as Huayou Cobalt, CATL, and CNGR, and then supplied to end users in the electric vehicle (EV) industries of G7 nations, including the United States and Germany. Tesla is known to source approximately 13 % of its nickel from Indonesia via Huayou Cobalt and CNGR. Volkswagen, Mercedes‑Benz, and BMW also indirectly procure nickel through Huayou Cobalt and CATL.

Companies from G7 countries have also been actively engaged in nickel mining and processing projects in Indonesia.

Eramet (France) holds a significant stake in PT Weda Bay Nickel (WBN), the concessionaire of a 45,065-hectare nickel mine in Halmahera, North Maluku.

Vale Canada Limited and Sumitomo Metal Mining (Japan) are principal shareholders of PT Vale Indonesia, which produces nickel matte in Sorowako, South Sulawesi.

Ford Motor Company (USA), in collaboration with Huayou Cobalt and PT Vale Indonesia, is constructing a High‑Pressure Acid Leach (HPAL) plant in Pomalaa, Southeast Sulawesi, with a capacity of 120,000 tons of nickel in mixed hydroxide precipitate (MHP) per year.

Hanwa (Japan) owns an 8 % stake in PT QMB New Energy Materials, an HPAL facility within the Morowali Industrial Park (IMIP).

Indonesia has become a critical midstream processing hub within the global EV battery supply chain, particularly for nickel-based lithium-ion chemistries such as NMC (nickel–manganese–cobalt) and NCA (nickel–cobalt–aluminium).

However, nickel ore and refined nickel producing areas in Indonesia are located in zones that are ecologically and locally important, and highly vulnerable. Land grabbing (with violence) of indigenous and local communities occurs.  High carbon emissions due to the use of coal-fired power plants, in addition to water and air pollution, and environmental degradation must be borne by communities around the nickel mining industry.

Companies like Vale Canada Ltd (33.88%) and Japan’s Sumitomo Metal Mining (11.48%) control shares in PT Vale Indonesia, which is expanding its nickel mine in Tanamalia, East Luwu, without involving communities in a Free, Prior and Informed Consent (FPIC) process. Mining plans in the Tanamalia block threaten more than 17,000 hectares of forest ecosystems and community plantations.

French company Eramet is also involved in Indonesia’s nickel supply chain network through its 37.8% stake in PT Weda Bay Nickel (WBN), which operates in Central Halmahera, North Maluku. The site is the customary territory of the O’Hongana Manyawa, a hunter-gatherer community that has long depended on the forest and their traditional living space.

Meanwhile, German automotive companies BMW, Mercedes-Benz, and Volkswagen, and the US company Tesla have been linked to the nickel production chain of Huayou Cobalt, which operates several smelters in the IMIP Industrial Estate, Morowali, and the IWIP Industrial Estate, Central Halmahera. The nickel production process at these facilities still relies on the dirty energy of coal-fired power plants, and the raw materials for nickel ore come from locations that are indicated to cause deforestation and agrarian conflict.

Huayou Cobalt is also collaborating with Ford Motor Company (United States) and Vale Indonesia to build the PT Kolaka Nickel Indonesia (KNI) smelter in the IPIP industrial area, Pomalaa. KNI shares are owned by Huayou Cobalt 73.2%, Vale Indonesia 18.3%, and Ford Motors 8.5%.

KNI is designed as one of the largest HPAL projects in Indonesia with an annual production capacity of up to 120,000 tons of Mixed Hydroxide Precipitate (MHP), an intermediate product for making electric vehicle batteries. The smelter, located in the IPIP industrial area, will be powered by a 1,760 MW gas-fired power plant, thereby keeping fossil fuels and contradicting the agenda of genuine decarbonization. The use of gas plants will only hinder the acceleration of renewable energy.

KNI is a collaboration across the economic interests of the G7 countries in Indonesia’s nickel industry, consisting of PT Vale Indonesia (owned by Vale Canada and Japan’s Sumitomo Metal Mining) and the US-based Ford Motor Company.

AEER and WALHI South Sulawesi urge G7 governments and corporations from G7 countries to consistently implement the Five-Point Plan for Critical Minerals Security announced at the G7 Climate, Energy and Environment Ministers’ Meeting, in Sapporo, Japan, on April 15-16, 2023.

The five points are: 1.Medium & Long Term Planning, 2. Responsible Supply Chain & Diversification, 3. Recycling & Circularity, 4. Innovation & Technology Substitution, 5. Preparedness for Supply Disruptions.

AEER and Walhi South Sulawesi urge G7 countries and corporations to implement:

1. Develop and strengthen human rights and environmental due diligence policies in critical mineral supply chains (implementation of point 2 of the 5 principles)
2. Stop the use of fossil energy, both coal and gas, in the production of nickel and other strategic minerals (implementation of points 2 and 4)
3. G7 nickel industry companies as pioneers of renewable energy development in nickel industry regions (implementation of points 2 and 4).
4. Conducting nickel usage quotas by G7 countries considering carrying capacity and environmental damage capacity (Implementation of points 1,2,3,4).

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