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Indonesia’s Deadly Mining Complex Powering the Electric Vehicle Revolution
Aerial view of the gigantic Indonesia Morowali Industrial Park in Bahodopi, Morowali, Central Sulawesi. Photographer: Muhammad Fadli for Bloomberg Businessweek
Businessweek | The Big Take
Nickel is pouring into the supply chain from an Indonesian industrial park with a history of fatal accidents.
By Matthew Campbell and Annie Lee
Illustrations by Kaitlin Brito
Photographs and video by Muhammad Fadli
June 17, 2024, 5:00 PM UTC
Early in the morning last Christmas Eve, Chinese and Indonesian workers prepared for a maintenance operation at the Indonesia Morowali Industrial Park. A complex of factories, smelters and power plants on the island of Sulawesi, IMIP erupts in a tangle of pipelines and smokestacks that belch particulates into the tropical air. The bulk of the tens of thousands of employees live just outside its walls, migrants to a hastily built city of plywood and sheet metal shanties that shelter motorbike shops and dingy rooming houses.
The workers had been tasked with fixing a submerged arc furnace, which melts nickel ore at temperatures around 1,400C (2,552F). Over time the residue of this process, known as slag, can build up, and the furnace overheats. On this day the plan was to replace heat-damaged bricks in the inner chamber and remove slag. With the furnace turned off, a technician began slicing into its steel shell with a flame cutter, to allow access to the interior. But someone had miscalculated: The slag inside hadn’t cooled enough. In fact, it was still molten.
The slag surged out from the cut, and the wall of the furnace collapsed. According to people familiar with the incident, who asked not to be identified discussing nonpublic information, acetylene canisters left nearby—used to fuel the flame cutters—started to explode from the surging temperature. The workers trying to contain the damage were hamstrung by communication difficulties, with virtually none of the Chinese staff able to speak fluent Indonesian, and vice versa.
Watch: The Dirty Secret Behind Electric Cars
As the sun rose, flames licked at the exterior of the factory building, which billowed with dark smoke. Workers tried frantically to aid their colleagues, many of whom had severe burns. Screaming for help, one group hoisted a blood-covered man into the bed of a pickup truck, which was already crowded with other victims. The onsite medical clinic was overwhelmed: Still in their tan uniforms, injured men lay on the floor, crying out in pain as nurses attended to those they could. By early afternoon, a dozen employees were confirmed dead, with many more in need of intensive care. The toll would soon rise to 21 men: 8 of them Chinese, 13 Indonesian.
One of the dead was Taufik, a 40-year-old mechanic from another part of Sulawesi. (Like many Indonesians, he used only one name.) Quiet and serious, he’d worked at IMIP for six years, and with overtime could earn about 8 million rupiah ($500) a month—a respectable wage in rural Indonesia. But he found the job exhausting and had been thinking about quitting to return to his wife, Ice Firawati, and their children, who’d stayed behind in his home village. On Christmas Eve, Ice had set out to visit him, a 15-hour journey by car and ferry. She was on the road when one of his friends called to tell her that Taufik was among the victims.
He and the others killed in the fire died in the service of one of the greatest industrial transitions in modern history. Over the past decade, Sulawesi and other Indonesian islands have been transformed into hubs for mining and processing nickel. The metal is a crucial component for making stainless steel, the purpose of the facility where the explosion occurred. It’s also essential to many electric-vehicle batteries. The government of outgoing President Joko Widodo, who’s better known as Jokowi, has enthusiastically promoted the nickel industry’s growth, seeing a chance to put Indonesia at the center of global supply chains—and to create employment for the country’s roughly 280 million people.
Controlled by Chinese metals giant Tsingshan Holding Group Co., IMIP is the product of more than $30 billion in investment. Sprawling across what was once a plain of farmers’ fields and fishing hamlets on Sulawesi’s eastern shore, a short distance from nickel-mining concessions that dot the surrounding hillsides, it boasts its own seaport and airport, along with a resort-style hotel for visiting executives. IMIP has created immense numbers of jobs, with more than 100,000 employees and contractors, and accounts on its own for a major percentage of Indonesia’s exports of nickel suitable for batteries. Overall, the nickel industry has helped deliver rapid growth for Indonesia’s economy, the largest in Southeast Asia.
That success has a dark side. December’s fire was the worst in a long series of fatal accidents at IMIP and other Indonesian nickel sites. Workers have been buried under slag, crushed by heavy equipment and killed in falls. In surrounding communities, residents complain of respiratory ailments that they blame on pollution from smelters and the coal-fired power plants that sustain them. And environmentalists accuse the nickel industry of flouting regulations intended to protect ecologically sensitive islands such as Sulawesi—while expanding production of a material critical to the EVs that Western governments promote on environmental grounds.
In most cases, auto manufacturers don’t directly source battery materials, and it’s difficult if not impossible to trace the metal in a given car to a specific nickel facility. But an extensive review of Chinese, Indonesian, South Korean and US corporate filings by Bloomberg Businessweek, as well as interviews with industry experts, shows that nickel from IMIP is present in the supply chain that feeds virtually every major seller of EVs.
Nickel requires extensive processing before it can be incorporated into EV batteries.
The first major step is smelting, which occurs at facilities such as the Indonesia Morowali Industrial Park in Sulawesi. Raw nickel ore is heated, often to extreme temperatures, to separate out the valuable metal.
Then, companies like China’s Zhejiang Huayou Cobalt process the nickel further and provide it to battery manufacturers around the world.
Finally, assembled battery packs are installed in vehicles from companies such as Tesla and taken out onto the road.
Notably, companies processing nickel there have direct or indirect supply relationships with many of the world’s largest manufacturers of batteries and battery materials, including South Korea’s LG Chem, Samsung SDI and SK Innovation. There’s a strong chance that metal is being used, or will soon be, in at least some cars manufactured by Tesla Inc., as well as BMW, Ford, General Motors, Hyundai, Stellantis and Toyota, among others.
Each of these companies has adopted extensive pledges on responsible sourcing and markets its electric offerings as better for the planet than traditional gas guzzlers. They nonetheless depend on workers who perform dirty, dangerous jobs with few safeguards.
In a statement on behalf of itself and Tsingshan, IMIP said “safety is always our priority,” and that it “quickly required all enterprises to carry out safety risk screening and rectification” after the Christmas Eve accident. It added that companies operating in the complex “must comply with all local environmental laws and regulations,” as well as internal pollution guidelines.
LG Chem Ltd. and SK Innovation Co. didn’t respond to requests for comment about their links to IMIP; Samsung SDI Co. declined to comment. Tesla and Hyundai didn’t respond to requests for comment. Other carmakers contacted by Businessweek emphasized that they don’t have direct business relationships with IMIP, but said they expect companies in their supply chains to comply with labor and environmental standards. Indonesia’s Ministry of Energy and Mineral Resources said it “diligently supervises” safety at nickel sites and is working to address health concerns.
The December explosion brought considerable scrutiny to IMIP, with Indonesian politicians declaring that nothing like it should be allowed to happen again. (That didn’t prevent another incident in January, when hot slag overflowed at a different smelter in the stainless-steel supply chain. No injuries were reported.)
But no one in power in Indonesia is seriously proposing curtailing the expansion of the nickel industry, which would jeopardize the investment and jobs it brings. Nor do international carmakers have much alternative to relying on it if they’re to meet their electrification goals profitably. With its cheap workers and cheap coal, Indonesia offers a dramatic cost advantage compared with other sources of nickel, which include Australia and Canada.
That’s especially important as growth in demand for EVs slows, putting pressure on manufacturers to make them more affordable. Tesla reported a slump in deliveries in the first quarter, missing analysts’ estimates by the largest margin on record; Ford Motor Co. has slashed production of its flagship electric pickup, the F-150 Lightning; and companies including General Motors Co. and Volkswagen AG have delayed or shelved EV plans.
At the same time, the massive expansion of the industry in Indonesia has led to a slump in global nickel prices, forcing the shutdown of mines in Australia and destroying the business case for new ones there and in other higher-cost locations. By 2030, Indonesia may account for nearly two-thirds of the global nickel supply, according to forecasts from BloombergNEF, up from about 47% last year.
That reality alarms the Indonesians trying to stop the nickel sector from leaving a trail of destroyed ecosystems and dead workers. “With every concession sold, more destruction and damage will also follow,” says Imam Shofwan, head of research at Jatam, a Jakarta-based environmental group. “We are very afraid of the future of this nickel industry.”
Nickel increases the energy density of battery cells, allowing a car to drive farther on a single charge. There’s an alternative, lithium iron-phosphate batteries—known as LFP, because of the chemical symbol for iron—which don’t use nickel at all. But their energy density is typically lower, and carmakers have hesitated to use them in higher-end vehicles. (China’s BYD Co., which outsold Tesla in the final quarter of last year, uses LFP batteries throughout its range of cars, which tend to be inexpensive.)
Nickel is a crucial component of many electric-vehicle batteries. Broadly speaking, the more nickel is used, the farther a car can drive on each charge.
The basic components of a lithium-ion battery are an anode, mostly made of graphite, and a cathode—divided by an electrolyte solution and a permeable separator.
In some high-performing modern batteries, nickel may account for more than half of the cathode material.
Indonesia’s nickel reserves are the world’s largest, but they were long considered to be too low-grade for use in batteries. Indonesians themselves received little of the benefit. With its poor infrastructure and modest industrial base, the country shipped its nickel ore overseas for processing, largely to China.
Two factors combined to change this. The first was a 2014 decision by then-President Susilo Bambang Yudhoyono to ban exports of unprocessed nickel ore. The initial goal was to force companies to invest in domestic processing plants, where nickel ore would be smelted in blast furnaces to separate the valuable metal. Under Jokowi, who took office later that year, the effort became more ambitious, with the government pushing for Indonesia to participate at every level of the EV industry, from mining nickel to fabricating batteries and assembling finished cars.
The second development was a series of breakthroughs by Chinese companies in a technology called high-pressure acid leaching. In HPAL plants, low-grade nickel ore is placed into pressure vessels, where it’s treated with sulfuric acid and heated. After that, the nickel that separates out will be suitable for batteries, once it’s refined. HPAL requires less energy than other types of nickel processing. The downside is that it generates huge amounts of waste, known as tailings.
Indonesian nickel processors use a disposal system known as dry stacking, where tailings are dried until they can, in theory, be compacted and piled up for storage outdoors. But nothing stays dry for long in a humid tropical archipelago, and environmentalists worry that stacked tailings could leach chemicals into the soil. Earthquakes and landslides, both common in Indonesia, could tip tailings down slopes or into waterways. (IMIP said in its statement that tailings are disposed of with tools such as “anti-seepage membranes” to prevent leaks, and that groundwater is monitored for contamination.)
Indonesia nonetheless permitted dry stacking. To increasingly powerful Chinese metals producers, the nation had it all: enormous supplies of nickel ore, workers and coal, as well as generous government incentives. Research provider Wood Mackenzie estimated last year that the capital cost of an HPAL plant in Indonesia works out to about $30,000 for each metric ton of nickel produced annually, compared with “closer to $100,000” elsewhere.
The Chinese company that most aggressively took advantage of this new opportunity was Tsingshan. Based in the eastern city of Wenzhou, it’s the top producer of nickel globally. Its billionaire founder, Xiang Guangda, exerts so much influence over nickel markets that commodity traders refer to him as “Big Shot.” Tsingshan had first agreed to build IMIP, in a remote but nickel-rich district called Morowali, in 2013. (An Indonesian conglomerate, BintangDelapan Group, is also a minority investor in the complex.) But advances in HPAL, as well as another breakthrough by Tsingshan, which developed a method for upgrading a low-end product called nickel pig iron, supercharged its growth. In 2020, IMIP hosted 19 separate enterprises, covering an area of about 2,000 hectares (just under 8 square miles). By the middle of last year, the number of tenants had ballooned to 52, while its physical dimensions had grown more than 50%; it’s now about 10 times the size of Manhattan’s Central Park.
A nickel mine in Sulawesi.
IMIP is a self-contained industrial city. Much of the nickel ore it requires is mined in the immediate area, then trucked down hauling roads to smelting facilities. Once it’s been transformed into “intermediate” nickel products, the material is loaded onto bulk carrier vessels at IMIP’s own port jetties and sent to China for further processing. Coal for its on-site generating plants comes the other way, shipped in from other parts of Indonesia. Such “captive” plants, which serve a specific industrial site rather than the regional grid, now make up around a fifth of Indonesia’s coal power capacity.
At IMIP, Tsingshan functions in part as a landlord and contractor, supplying shared services such as power and port access. But it also operates its own smelters and other industrial facilities and has minority ownership positions in those operated by others. Workers are often hired through subcontractors or third-party staffing agencies, which may have their own ties to Tsingshan or other IMIP investors. The upshot is that it’s hard to financially disentangle any one entity operating in IMIP from Tsingshan, or from the overall operations of the complex. (IMIP said each tenant company “is an independent legal entity” that’s “responsible for its own business activities.”)
The model has worked well enough that Tsingshan is replicating it about 450 miles away on the island of Halmahera, in a development called Indonesia Weda Bay Industrial Park. Other companies are developing nickel facilities across the country. According to Project Blue, a provider of data on clean-energy raw materials, 20 HPAL projects are under development in Indonesia, dwarfing the number in every other country combined.
Respiratory illnesses are a common complaint in the community surrounding IMIP, whose industrial tenants rely on coal for power.
Waterways in the area are rusty red, a result of runoff from mining operations.
Long before arriving at IMIP, along the narrow highway that traces the shore of the Banda Sea, you see the haze—a soup of emissions from smelters and power plants, as well as dust from mine sites and coal depots. Sometimes tinted brown, sometimes a thick gray, it shrouds the nearby mountains and hovers over the water, lending the landscape the pallor of Delhi. Squint through it and you can spot the mining concessions: broad swaths of hillside where trees and soil have been torn away to access the nickel ore beneath. Downslope, waterways are rusty red from the runoff.
Closer to the complex the traffic thickens with uncountable motorbikes, their drivers wearing the yellow safety helmets that mark them as IMIP employees, heading to or from their shifts. Piles of trash line the roadside; a small stream that passes underneath is so choked with water bottles, plastic bags and takeout containers that the water can barely flow. Closer still, a maze of ramps and catwalks appears overhead, connecting the smelters, which are sited on a plateau flattened to industry-friendly dimensions, to the port. A constant procession of red dump trucks carries coal uphill from arriving ships.
Before Tsingshan invested here, this area was desperately poor. Twenty-four-hour electricity arrived only in 2011. Some local residents recall that when they were children, their families couldn’t afford rice; their staple food instead was sago, a low-nutrient starch extracted from the trunks of palm trees. The region has since undergone a boom. Government statistics show that Morowali’s economy grew almost 600% from 2015 to 2022, and IMIP has attracted workers from all over Indonesia. Thousands of Chinese staff have also arrived, often taking more specialized engineering and technical roles. Paid several times more than their Indonesian counterparts, they live onsite and rarely, if ever, go outside the IMIP perimeter.
Very little of the money invested in IMIP has filtered into the community. The main road devolves in places into tire-swallowing, water-filled potholes. Beyond that, the streets are mostly unpaved and turn to mud when it rains. IMIP’s power plants have a combined current capacity of over 5,300 megawatts—more than the largest nuclear facilities in the US—and huge piles of coal are stored in plain sight. But outside its perimeter the grid can’t meet demand, and businesses use generators to keep their lights on through frequent blackouts. They’re a luxury beyond the budget of most local workers, who crowd into closet-size rooms in makeshift dormitories and take their meals in roadside stalls selling fried chicken or offal stew.
Workers on their way to IMIP.
Even then, many struggle to earn a living that allows for more than day-to-day subsistence. Annisa, a 36-year-old single mother who works in IMIP’s catering department, explained that she makes around 6 million rupiah per month—about $370. (Like other nickel industry employees interviewed for this story, her name has been changed to protect her from repercussions for speaking to reporters.) “How to survive, trying to fulfill our needs with that number?” she asked. An unfurnished room costs up to 1.5 million rupiah per month, and daily essentials in the remote region are far more expensive than in other parts of Indonesia. A canister of cooking gas can cost 55,000 rupiah, more than double the price charged in Makassar, a city of about 1.5 million that’s Sulawesi’s largest.
Annisa said she worries that her income is coming at the expense of her health. When pollution is severe, she said, “it can be hard to breathe … the dust is the worst. It affects the face, the eyes.” But she sees little alternative to her current situation: Away from IMIP, there aren’t many jobs in rural Sulawesi. “There is no other choice,” she said. (IMIP said its wages are “much higher” than those of other local employers.)
Abdul Malik is concerned about the number of local tuberculosis infections.
While the long-term effects of exposure to the pollutants at IMIP are unclear, the information available suggests residents are at risk. “The greatest impact on air quality is from the coal power plants, especially on the community around the facility … and all the communities see the dust in their homes,” said Abdul Malik, head of the community health center in Bahodopi, a town immediately adjacent to IMIP. In the lobby, families crowded into the waiting area seeking attention; respiratory illnesses are the most common complaint. Outside, a sign urged residents to “get used to wearing a mask when leaving the house” to protect from pollution.
As Malik spoke, an assistant with a laptop pulled up statistics on respiratory diseases such as tuberculosis. “TB is quite common in Indonesia, but the concern is the number” of local infections, Malik said. Based on national and regional trends, the center expected to see around 74 cases in 2022. Instead, it logged 117—58% above the estimate. While TB is caused by a bacterial infection, medical researchers have observed that it’s more common among people who are exposed to significant air pollution.
Still, daily life continues, albeit at a proximity to heavy industry that would be unimaginable in much of the developed world. Farther down the shore, where IMIP is aggressively expanding into a town called Labota, the gray tower of one of its coal plants hovers over an elementary school. The schoolyard, an expanse of bare rocks and dirt with a forlorn volleyball net, lies directly in the smokestack’s shadow. “Of course there are effects from the plant. It’s hard to breathe, you cough,” said Hasrawati, a 31-year-old English teacher. “If we don’t wear glasses, you feel the dust in your eyes.” Sometimes, she said, so much blows into the school that “if we walk on the floor, we can see our footprints.”
Children do their morning exercises at an elementary school in Labota, where IMIP is aggressively expanding.
With the government strongly supportive of IMIP’s growth, some of its critics are trying to appeal to international audiences. When Businessweek visited late last year, there were large posters, printed in English, above the main road in Labota. Their headings indicated they were addressed, somewhat optimistically, to the executive director of the United Nations’ high commissioner for human rights and UN Environment Programme. “COME & HELP US,” they said in red capitals.
In a motorcycle shop next door, the owner, Bahar, explained that the posters had been put up by an activist from Makassar. Bahar said he had no expectation that the situation would improve: “We feel like we’re alone. No one is trying to help or to hear our voice.” Between drags on a cigarette, he hiked up the leg of his trousers to reveal pink, ulcer-like sores, each surrounded by a circle of darkened skin; a local medical clinic, he said, had told him they were caused by exposure to coal residue. Despite the tens of billions of dollars spent on Morowali’s nickel industry, Bahar said, there’s “no benefit for us at all. We just get sick.”
Nickel industry managers say they’re mitigating, and compensating for, their social and environmental impacts. IMIP said it shares electricity with the community and monitors air pollution to ensure compliance with Indonesian rules; in 2023, “all air quality tests met the standards.” The complex funds local schools and buys ambulances for nearby villages. It’s also installing solar panels, though they’ll provide only a fraction of the electricity needed for nickel smelting. Indeed, IMIP isn’t done building coal plants. Plans call for it to ultimately operate perhaps 6,000 megawatts of coal power, enough to meet the electricity demand of about 5 million US homes.
To Hamid Mina, IMIP’s managing director, this choice of energy source, and everything else, comes down to the cost to the ultimate end-users: carmakers and their customers. “Now everyone is concerned about the environment,” Mina said in an interview in Singapore. “OK, I use solar panels. Are you willing to buy a car with two times the price?” Mina said he resented being lectured by citizens of rich countries that had engaged in their own environmental despoliation. “Europe, United States, Canada—you already cut everything down,” he said. “Now you’re blaming us.”
Over time, Mina explained, IMIP would use its cost advantage to move up the EV value chain, taking over processing that now occurs in China—and on a site that he said could still substantially expand in size. He argued it could do so while reducing its environmental impact, thanks to future improvements such as better pollution filtering in coal plants—and that much of the responsibility for conditions beyond its walls lies with the government, to which “we pay a lot of tax.” Mina also asked critics to consider the tradeoffs. Before IMIP came to Morowali, “there were trees, forest, nothing. But sometimes they ate only once a day. Today we have industry, dust, smoke … but I give them jobs.”
Little of IMIP’s infrastructure investment has reached the surrounding communities.
Even before the fire on Christmas Eve, fatal accidents were common in Indonesian nickel facilities. Trend Asia, a nongovernmental organization based in Jakarta, compiles statistics on such deaths based on media reports. From 2015 to 2022 it logged 53 fatalities; in the first 11 months of 2023, it recorded 17. (These figures aren’t necessarily comprehensive, since not all accidents make the news.)
In interviews with Businessweek, more than a dozen current and former IMIP workers expressed worry about safety conditions, or said they had personally witnessed or been affected by workplace accidents. While some said that managers had attempted to improve their conditions, the workers described an environment rife with danger—from construction sites where a moment of inattention can be fatal to growling, temperamental smelters, capable of immolating their attendants if mishandled. Among huge, sometimes ill-maintained machines and chemical processes conducted at incinerating temperatures, disaster is always possible.
One employee described an incident in which a machine operator fell into a pool of molten slag, killing him instantly; another was familiar with accidents in which workers’ hands had been crushed by machinery; another, an occasion when a worker was fatally run over by a forklift. In yet another instance, a young employee was struck and killed by a falling piece of metal. Virtually all the workers confirmed the contents of a standard policy imposed by IMIP and its tenant companies: When a serious accident occurs, employees are told not to discuss it publicly or share photos on social media, with penalties that can include termination. (IMIP said that employees can “send, forward and share any information.”)
The families bereaved by accidents in nickel facilities aren’t just in Indonesia: A substantial number of workers killed over the years have been Chinese, including some of the December victims. Last year a group of Chinese men who said they’d been employed at IMIP filed a formal complaint with Indonesian authorities, alleging they’d been forced to work excessive hours without protective equipment. The volume of accidents in Indonesian nickel facilities “points to a systematic and institutionalized pattern of poor labor practice,” China Labor Watch, a New York-based monitoring group, said in a recent report on the industry.
While they face the same dangers, relations between Chinese and Indonesian staff can be tense, and some IMIP workers attribute safety failures partly to a culture clash. Chinese managers “sometimes break the Indonesian safety rules,” says Hasri Sonna, an official with FPE, a union representing IMIP staff. “There are a lot of injuries—and more injuries without data, that are not recorded.” Other issues are more practical: Until recently, according to Arnold Firdaus Bandu, the head of the government Manpower Office for the province that includes Morowali, some equipment manuals were in Mandarin, with no translations available. (IMIP said it investigates employee complaints and records all injuries; meanwhile, it said, “all documents must be bilingual in Chinese and Indonesian.”)
Agus, a safety manager at a Tsingshan-controlled company within IMIP, described a dispute with his Chinese superiors over the operation of dump trucks, which are used in huge numbers to move coal and nickel ore around the complex. The trucks sometimes developed leaks in their air brake systems, risking a brake malfunction if the vehicles weren’t repaired. Agus said that when he objected, “because of the pressure of production, they would say ‘keep using it.’” Another employee, a dump truck operator, said workers are sometimes instructed to drive vehicles with broken suspensions.
Agus had also worked on a conveyor belt that moves coal towards a power plant. There, he said, workers each received 15 respirator masks per month. But in an environment thick with coal dust, each mask would become saturated after four or five hours. By the end of a shift, Agus said, workers would often find coal residue around their mouths, suggesting they’d been inhaling it.
Other risks are more acute. Agus and a worker, Arif, from another IMIP-based company, said they’re sometimes told to perform cleaning and maintenance around conveyors while the belts are still running to avoid slowing production by shutting them down. “It’s only a few centimeters from the conveyor,” Arif said, which could result in a serious accident if, for example, clothes get caught in the machinery. The risks are compounded by a consuming pressure to move fast. “Welding or any other repairs should not be done in a hurry,” Arif said. “Everything about safety should be improved.”
In its statement, IMIP said “faulty or abnormal equipment,” including vehicles, “is strictly prohibited from participating in production,” and workers must be provided with protective equipment that “meets the requirements of laws and standards.” Moreover, “it is strictly prohibited to perform surrounding cleaning or maintenance tasks when the conveyor belt is running.”
Despite the danger, many workers told Businessweek they were grateful for their jobs. But even some of those who said they were generally happy at IMIP shared harrowing stories. Henry, a mechanic in a smelter, said that a few years earlier he was working around a piece of equipment called a mud gun, which is used to close the outflow hole of a furnace. Apparently unaware that Henry was there, a colleague activated the hydraulics without warning. The machine slammed into Henry’s chest, pinning him. For a month, he struggled to sleep because of the pain.
In 2022, according to a person with direct knowledge of the matter, Tesla’s battery supply chain team brought a report to Chief Executive Officer Elon Musk on making a major investment in nickel production in Indonesia. But Musk turned them down, the person says. He’d always resisted joint ventures, which would be the only practical strategy. He was also wary of the country’s unpredictable politics and shaky environmental record.
Despite Musk’s refusal, Tesla uses large volumes of nickel from Indonesia for its higher-end models. (Some of its entry-level cars use LFP batteries.) In 2022, Tesla entered long-term supply contracts for battery materials with two Chinese companies, Zhejiang Huayou Cobalt Co. and CNGR Advanced Material Co. In its most recent sustainability report, Tesla identified both companies as nickel suppliers, with China and Indonesia listed as source countries.
From Earth to EV
An indicative selection of supply chain relationships tracing the path of Indonesian nickel, based on Bloomberg Businessweek’s review of corporate filings.
A substantial proportion of that material is likely coming from IMIP, or will soon. Huayou is the majority owner of an Indonesian entity called PT Huayue Nickel Cobalt, which operates a major smelter in the facility; filings show it accounts for at least 23% of Huayou’s current operating capacity in Indonesia. CNGR is the lead investor in another IMIP smelter, PT Zhongtsing New Energy, which represents about 31% of CNGR’s planned nickel capacity in the country. Tsingshan, IMIP’s parent company, has financial connections to both: A Singapore entity it controls is an investor in PT Zhongtsing, while an Australian company with which it’s affiliated has a stake in PT Huayue. (In its sustainability report, Tesla said it has “invested significant resources” to address environmental and safety risks in Indonesia, and that “the transition to EVs will not be possible by only relying on non-Indonesian nickel.”)
Other EV manufacturers have similar connections to Morowali, through intermediaries. Huayou lists LG Chem as a key customer in filings, and the two companies have an extensive relationship, including plans for a shared nickel-smelting operation in Indonesia. Recently, LG Chem announced a roughly $19 billion supply contract with General Motors; a subsidiary, LG Energy Solution, is developing a joint battery plant with Hyundai Motor Co. and has deals to supply batteries to car makers such as Toyota Motor Corp.
Another example begins with an IMIP smelter called PT QMB New Energy Materials, which is controlled by China’s GEM Co. The Korean company EcoPro is an investor in PT QMB, and GEM identifies it in filings as a major customer. It or its affiliates supply materials to Samsung SDI and SK Innovation; the former has made batteries for cars such as the BMW i7 and is building a US battery-manufacturing complex with Stellantis. The latter has supplied batteries for Ford’s F-150. (EcoPro declined to comment.) A unit of China’s Contemporary Amperex Technology Co., whose batteries are used in vehicles from Mercedes-Benz and Volkswagen, among others, also has a stake in PT QMB, though a spokesperson said that “no CATL batteries include nickel from IMIP.”
GEM didn’t respond to a request for comment. In separate statements, Huayou and CNGR said they raised safety standards after the Dec. 24 explosion, and view preventing workplace accidents as an overriding priority. Both companies also said they comply with relevant environmental standards.
Even if carmakers wanted to, it would be challenging to ensure their vehicles don’t contain nickel from IMIP or any other specific mine or smelting complex; once it reaches processing plants in China, it can mingle with material from many sources. And for the moment, there aren’t obvious alternatives. “To exclude Indonesia from the supply chain, it would be near impossible to meet EV rollout targets,” says Jack Anderson, a research director at Project Blue. “Simple as that.”
Indonesia’s next president will be Prabowo Subianto, who won a decisive election victory in February. A former military commander and veteran of some of the country’s bloodiest internal conflicts—he was for a time effectively banned from the US because of alleged involvement in human-rights abuses, which he’s denied—Prabowo is a controversial figure. He nonetheless represents a degree of continuity, not least because Jokowi’s son will serve as his vice president. (Jokowi himself was term-limited.)
On the campaign trail, Prabowo endorsed “downstreaming,” as Jokowi calls his policy of expanding nickel production. The arguments for staying the course are strong. The median age of the population is around 30, and there’s an urgent need for jobs. Downstreaming has also been lucrative for the financial and political elite. Three nickel companies went public on the Jakarta stock exchange last year, spinning off work for the capital’s bankers and lawyers. At the same time, tax revenue generated by the industry provides a resource for political patronage, in a country with a rich tradition of graft: In Transparency International’s most recent Corruption Perceptions Index, Indonesia ranked 115th, behind Belarus and Kazakhstan.
Some nickel industry figures have suggested that, eventually, carmakers may insist on higher safety and environmental standards. That could mean playing a direct role in mining and refining—which would also provide more control over the supply of a critical industrial input. Ford, for example, has partnered with Huayou and Vale SA to develop an HPAL project in Sulawesi; in a press release, a Ford executive said the plan would “better protect people and the planet.” And companies have long sought to develop technology to help end-users know the origins of their raw materials, though some tracing efforts have struggled. Either way, so-called green nickel will come at a premium to current prices, which manufacturers may not be willing to pay—or pass on to their customers.
And in even the most aggressive scenario, the introduction of such a separate supply chain is years away. For now, most carmakers will continue to get their nickel from the cheapest, most abundant sources available—with the costs borne by the mainly poor Indonesian and Chinese workers who operate mines and smelters.
In late December 2022, word began circulating on social media of a fatal explosion at PT Gunbuster Nickel Industry, one of the main operators in a smelting complex about four hours’ drive from IMIP. Two workers had been in the cab of a crane when coal dust caught fire below. Trapped, they burned to death. In another part of Sulawesi, Niluh Novi Barniarthi, 28, saw the news and was alarmed. Her 20-year-old brother, I Made Defri Hari Jonathan, had been working as a trainee at Gunbuster.
Jonathan had told Barniarthi that he was enjoying the work; he’d talked about using his earnings to expand the family’s small rice farm. Then a cousin called to tell her: Jonathan was one of the dead, along with a young female colleague, Nirwana Selle, who’d developed a following on TikTok for her cheerful videos about life at a nickel smelter.
Gunbuster arranged to drive Jonathan’s body to the farm. He was laid to rest on Dec. 26—the birthday of his mother, Ni Ketut Sunarti. “Jonathan always gave me a cake for my birthday. Instead we had his funeral,” she said in an interview in the family’s home. The concrete-floored house was decorated with photos of her son: posing for a portrait in a shirt and tie, playing the keyboard at a church service. Gunbuster provided some compensation, but the family hadn’t spent it. “The money is like Jonathan’s body,” said his father, I Ketut Bartolomius. “How could we use it?” They felt the same way about selling Jonathan’s motorcycle, which sat in the garage unused.
PT Gunbuster Nickel Industry.
Jonathan’s parents in their home.
A photo of Jonathan.
The complex that hosts Gunbuster was set up by China’s Jiangsu Delong Nickel Industry Co. and is devoted primarily to producing lower-grade nickel for stainless steel. But it’s becoming part of the EV supply chain: Tesla supplier CNGR has inaugurated a facility there to produce nickel matte, which can then be processed into material for batteries. Filings indicate that its capacity for such products will be greater than CNGR’s operation at IMIP.
It’s entering a site with a dismal safety record. After the accident that killed Jonathan and Selle, workers at Gunbuster staged protests over conditions. These soon turned violent, and two people were killed in the ensuing melee. Indonesia’s national human-rights agency, Komnas HAM, investigated the clashes and the events that preceded them. In a report, the watchdog wrote that “unsafe working conditions, lack of protection for workers’ health and welfare, and disregard for corporate responsibilities make this situation extremely serious and unacceptable.”
In a cafe nearby, Gunbuster workers told Businessweek that they feared constantly for their safety. Periodically the power went out, pitching the cafe into darkness for the few seconds it took for patrons to switch on their phone flashlights. Agung, a mechanic, explained that he wasn’t provided with protective goggles; if he wanted them, he would have to buy them for as much as 1 million rupiah, out of his monthly salary of just 3.7 million rupiah. His large eyes were red and watery—the result, he said, of welding without eye protection. Some months earlier, a colleague had lost an eye when a splash of hot metal hit his face.
A community near Gunbuster.
Agung, a mechanic, said that if he wanted protective goggles, he had to pay for them himself.
Gunbuster said in a statement that employee welfare is “our utmost concern,” and that it complies with safety rules and is seeking to improve conditions. “However, work accidents are a risk that can occur in various industries and work situations, without exception.” CNGR said it’s committed to “continuous improvement” of safety in its new project.
As at IMIP, workers at Gunbuster are told not to share information after accidents. But such mandates can’t match the speed of the internet, and photos circulate in employee WhatsApp groups. Agung shared an image dated June 26—the day of a deadly smelter explosion at Gunbuster that Indonesian media reported on. It showed two shirtless workers receiving medical attention. One, slumped on a plastic chair, had frayed bandages on both arms and his face. The other was sitting upright, with strips of bandages across his eyes, nose and cheeks, as well as his left hand.
Chinese staff, working in an unfamiliar country, can be vulnerable in different ways. Zhou, a worker in his late 50s, came to Gunbuster in 2021 from Hunan province to work in construction. Soon after he arrived, he said, he was struck by a rock falling from an excavator. (Gunbuster said it had no comment on Zhou’s account.) Bleeding, he took the day off work—and later learned that his pay had been docked. Zhou said that after he complained, three men woke him and began beating him until he passed out. He eventually went to a hospital; a medical report he shared with Businessweek indicated that he was diagnosed with a suspected skull fracture. But Zhou said that his superiors refused to let him stay for treatment. He eventually made it back to China, where he sent a letter to local officials describing his experience. He said he never received a response.
The nickel processed at Gunbuster, and by CNGR at the same site, is mined from high above the smelter complex, accessible by hauling roads that wind up the hillsides.
The extraction of lateritic nickel, the type that’s available in Sulawesi, looks nothing like what most people picture when they think of a mine. The ore lies just below the surface, so there’s no need for a deep pit, let alone a tunnel descending to underground deposits. Instead, crews clear-cut broad areas of forest and remove the top layers of earth, exposing nickel-containing material that can then be carried out. New concessions are appearing up and down the coast of Sulawesi as the smelters expand, leaving jagged gaps in the tree cover. Mining companies are supposed to restore the forest when they’re done, but environmental groups are skeptical that this will ever make up for the losses.
On a recent morning at a mine site near Gunbuster, an orange excavator chewed away at a mound of dirt as a dump truck waited nearby. The sun was punishing, and a pair of workers on a break sat under a crude shelter, erected from sticks and a tarp. Just down the slope, it was possible to make out the smelters in the hazy distance, accessible by an unpaved hauling road. Columns of trucks flowed toward it and away, throwing up clouds of dust. Beyond, on the Banda Sea, the nickel ships were waiting for their cargo. —With Mohammad Jafar Bua, Alfred Cang, Regif Asri Ibrahim, Eko Listiyorini and David Stringer
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