Ford, Brazil’s Vale and China’s Tsingshan, as well as Jardine Matheson of Hong Kong, have invested in Indonesian Nickel projects that are responsible for clearing large areas of some of the most biodiverse forest on the planet.
New data from environmental group Mighty Earth and their partner Brown Brothers Energy and Environment show that 329 nickel concessions have cleared at least 76.301 hectares of tropical forest, an area larger than New York City. Around 23,000ha, or 30% of this area, has been cleared since 2019 as the demand for nickel batteries and electric cars has grown.
Indonesia is hoping to be a global leader in the supply chain for electric vehicles with its nickel reserves. US Geological Survey data indicates that Indonesia produced almost half the nickel in the world last year.
Deforestation and other issues, including pollution, waste, and the displacement of villages have put pressure on government officials and mining companies to improve their practices. Carmakers are also looking for alternatives to nickel in Australia. In March, President Joko Widodo announced that Indonesia would increase its scrutiny of the mining sector and instruct companies to reforest depleted areas. This latest data on deforestation was obtained by the University of Maryland’s Global Land Analysis and Discovery (Glad) and Wageningen University’s Radar for Detecting Deforestation (Radd). They receive alerts that show disturbances in the forest canopy, which indicate trees may have been lost or removed. Indonesia’s nickel deposits are found in so-called ultramafic forests, biodiverse because the high metallic content makes them difficult to farm.
Analysts and environmental groups have warned that Indonesia may repeat the mistakes of the palm oil industry in terms of deforestation if more is not done to protect forests against nickel mining. We are at risk of a palm-oil 2.0 scenario with the deforestation to mine nickel, said Mighty Earth Senior Director Amanda Hurowitz. She was referring to the environmental havoc caused by intensive palm oil farming, which is a key component in everything from pizza to deodorant.
The deforestation of palm oil plantations is now a fifth less than it was in its peak, thanks to government initiatives and voluntary initiatives by companies to reduce or eliminate the deforestation.
Hurowitz stated that if nickel miners were to apply the same standards as palm companies, many concessions would be “untouchable” due to their biodiversity.
A former Indonesian mining executive said that the loss of biodiversity was the greatest issue for Indonesian nickel. It is an urgent issue.
“Being rich with natural resources, Indonesia had previously struggled to find a balance between environmental and social protections, and economic gains,” said Melissa Cheok. She is the associate director of Sustainable Fitch’s research division for environmental, sustainability, and governance.
Investor confidence could be hurt if [Indonesia’s government] fails to deliver on its promises to protect the environment when mining for these metals.
Experts independent of the nickel mining companies said that some clearance could have been linked to agricultural projects.
Brazilian mining company Vale is responsible for three of the five top projects that have the most deforestation. Vale’s Soroako and Pomalaa sites on Sulawesi island show 19,638h in deforestation from 2014. Vale is partnering with Huayou Cobalt, Ford and China’s Huayou Cobalt on Pomalaa.
Vale reported that it had rehabilitated 13 527 hectares in February — approximately 3,500 hectares within its concessions, and 10,000 hectares outside — and the Indonesian Government has consistently recognized its “leading standards” of environmental stewardship. It also said that it had cleared 5,481 acres of land within its concessions.
According to Mighty Earth, a mining and production project in Sulawesi owned by the Indonesian Bintang Delapan Group with its joint venture partner China Tsingshan has lost nearly 2,738h since 2010.
United Tractors is a subsidiary owned by Astra International and controlled by Hong Kong-based Jardine Matheson. It bought a 20% stake in Nickel Industries, an Australian company listed on the stock exchange, last month. Nickel Industries, a Tsingshan subsidiary, owns the majority stake in Hengjaya Mineralindo. Mighty Earth Analysis estimates that around 271 hectares have been deforested in this concession.
United Tractors stated that it would monitor and encourage the good mining practices of Nickel Industries, including reclamation. It also added that the EV sector will help to decarbonise Indonesia’s economy in the long run.
Ford and Tsingshan have not responded to our requests for comment. Huayou Bintang Delapan and Ford did not respond to comments.