Indonesia's bet on nickel as the foundation of a green energy economy is dismantling the farms and forests of Sulawesi - and the communities that depend on them.
Indonesia holds the world's largest nickel reserves, and the world wants them badly. As electric vehicle sales accelerate across Europe, China, and North America, automakers and battery producers have turned to this equatorial archipelago as their essential source of the metal that makes high-range EV batteries possible. The result, on the island of Sulawesi - the undisputed center of Indonesia's nickel boom - is a land transformation happening at a pace and scale that is swallowing farms, forests, and fishing communities faster than any legal or regulatory apparatus can track. What is being built is a supply chain for the green economy. What is being dismantled is the agrarian fabric of one of the world's most biodiverse island ecosystems.
Indonesia today produces more than 55 percent of the world's mined nickel, and that share is expected to climb toward 65 percent by 2030. The numbers behind the industry's growth are staggering. The Indonesia Morowali Industrial Park (IMIP), a complex of factories, smelters, and coal power plants carved out of what was once farmland and forest on Sulawesi's eastern shore, has absorbed more than $30 billion in investment since its founding by China's Tsingshan Holding Group in 2013. It now stretches across roughly 5,500 hectares and employs upward of 85,000 workers - an industrial city conjured in under a decade in a region that had no industrial base to speak of.
The strategy driving all of this is Jakarta's so-called downstreaming policy. Recognizing that exporting raw nickel ore delivers only a fraction of the value of exporting refined nickel products, Indonesia banned the export of unprocessed ore in 2020. The move worked as intended: Chinese companies, which dominate nickel refining technology globally, poured in at scale. By 2024, China had committed an estimated $65 billion to Indonesia's nickel sector. Chinese firms now control approximately 90 percent of the country's nickel mines and processing plants. The economic logic was clear. What was less visible - at least to the planners in Jakarta and Beijing - was what would happen to the people already living on the land.
In the hills above Lake Towuti, in South Sulawesi's Loeha Raya district, a group of five villages housing some 8,100 residents and more than 3,500 farmers has been watching the exploration equipment arrive on their land since early 2024. The source is PT Vale Indonesia, the Brazilian-Japanese-Indonesian mining giant that operates the Sorowako Block - the oldest and largest nickel concession on Sulawesi, spanning 70,566 hectares and operating continuously since 1968 when then-President Suharto inaugurated its first smelter. Indonesia extended PT Vale Indonesia's license through 2035, and the company confirmed to Mongabay it has drilled 1,831 boreholes across targeted hill sites within the concession since 2022. For the farming communities of Loeha Raya, the appearance of those boreholes near pepper farms and ancestral forest has produced a specific kind of dread.
"We are very worried about the company expanding mining here," said Lismar, a pepper farmer in Rante Angin village who found company employees drilling near his fields. "When there is drilling exploration, people are afraid to farm." Rahman, recognized by his community as a principal ancestral landholder, says neither he nor his neighbors were properly consulted before the drilling began. The Indonesian NGO WALHI and the Loeha Raya Farmers' Cooperative documented that consultations held in 2023 took place in Makassar - a 20-hour drive away - were closed to women's farming cooperative groups, and were conducted in the presence of military personnel who had previously harassed some of the communities in question. PT Vale Indonesia disputes that characterization. The auditing organization IRMA is conducting a review.
The Loeha Raya situation is far from isolated. On Wawonii Island in Southeast Sulawesi, nickel miner PT Gema Kreasi Perdana (PT GKP), owned by one of Indonesia's wealthiest families, holds two concessions totaling 1,800 hectares and has been pushing for more land from farming families who did not consent to the process. Royani, a local farmer who watched PT GKP clear hundreds of her family's tropical spice trees, described the moment she saw the damage: "When we saw there was nothing left, we were destroyed." Hastoma, a 37-year-old coconut farmer, was detained for 45 days after clashes between villagers and company crews. Hastati, 42, whose cashew land has already been partially cleared, was unequivocal: "Even for 1 billion rupiah, I don't want to sell." These are not isolated grievances but a documented pattern. The US Institute of Peace reported in 2024 that indigenous farmers near the Sulawesi Cahaya Mineral mine, controlled by Merdeka Battery Materials (MBMA), have been systematically evicted since 2022, with little legal recourse because many lack formal land titles under Indonesian law.
The dominant force in Sulawesi's nickel industry is Tsingshan Holding Group, the Chinese metals conglomerate headquartered in Wenzhou whose billionaire founder, Xiang Guangda - known in commodity markets as "Big Shot" - turned a bet on Indonesian nickel processing into the world's largest nickel operation. IMIP, the complex Tsingshan controls, has grown from 2,000 hectares in 2020 to roughly 5,500 hectares by late 2024. It now hosts 52 separate enterprises, including smelters, steel plants, and HPAL facilities that supply intermediate nickel products to battery manufacturers in China, whose customers include Tesla, Ford, General Motors, and virtually every other major EV brand.
The human cost has been severe. Between 2015 and June 2024, at least 40 workers died in accidents at IMIP alone, with 114 fatalities recorded across Indonesia's nickel industry in roughly the same period. On Christmas Eve 2023, a maintenance operation on a submerged arc furnace went catastrophically wrong when workers sliced into the furnace's steel casing without realizing the slag inside was still molten. Twenty-one people died in the explosion and fire that followed. The blast drew rare political attention in Jakarta, with legislators declaring such accidents could not be allowed to recur. The following January, a different smelter at IMIP suffered another hot slag overflow.
Workers at IMIP describe an environment where oversight is difficult to enforce and conditions vary sharply by employer within the same industrial park. Beyond the fence line, communities report respiratory ailments they attribute to particulate emissions from the smelters and from the coal-fired power plants - IMIP currently operates coal plants and has plans to expand to as much as 6,000 megawatts of captive coal capacity, enough to power approximately 5 million American homes. "With every concession sold, more destruction and damage will also follow," said Imam Shofwan, head of research at Jatam, the Jakarta-based environmental watchdog. "We are very afraid of the future of this nickel industry."
The irony that has settled over Sulawesi's nickel belt since 2023 is that the very success of Indonesia's downstreaming strategy is now destroying the financial case for it. Nickel prices peaked at more than $100,000 per tonne in March 2022 as war in Ukraine disrupted supply and EV demand accelerated expectations. By late 2024, prices had fallen to $16,000-$18,000 per tonne - a collapse of more than 80 percent driven largely by the flood of Indonesian output the policy was designed to produce. Indonesian and Chinese producers, backed by cheap coal power and capital that can sustain lower margins, are still operating. Western miners - in Australia, Canada, and elsewhere - have been closing nickel operations and writing down assets by the billions.
The crash has introduced a second structural threat: lithium iron phosphate batteries, which contain no nickel at all, now represent more than 40 percent of global EV battery capacity sold. BYD, the Chinese EV maker that has displaced Tesla as Indonesia's largest EV brand by sales, uses LFP batteries exclusively in its Indonesian lineup. Indonesia's entire downstreaming bet was placed on nickel-rich battery chemistries dominating the EV transition. That bet is increasingly contested. The Indonesian government is considering production quotas to support nickel prices, but analysts warn that cuts deep enough to matter could trigger layoffs at facilities employing tens of thousands of workers.
The geopolitical architecture of Indonesia's nickel industry is one of near-total Chinese control. Chinese companies own approximately 75 percent of refining capacity. Tsingshan alone, through its affiliates, is estimated to control operations accounting for a substantial portion of Indonesia's primary nickel output. In 2024, 82 percent of Indonesia's nickel exports went to China. While Jakarta collects taxes and royalties on the exports, the high-value stages of the supply chain - refined cathode materials, battery cell manufacturing, finished EV production - happen elsewhere, mostly in China.
This creates a compounding problem. The communities that bear the land and health costs of nickel extraction receive neither the processing employment nor the proceeds that flow downstream. Employment data from Indonesia's national statistics agency shows that despite the mining boom, poverty and unemployment metrics in Sulawesi's mining-heavy districts have not improved meaningfully. Companies frequently offer conditional employment to landowners who agree to sell, a practice the Lowy Institute identified in 2024 as structurally precarious: workers may lose both their land and their jobs if industry conditions change.
The Western companies whose supply chains depend on this system have shown limited appetite for change. BASF and Eramet canceled planned refinery investments at IMIP in mid-2024, citing both commercial concerns and reputational risks - an implicit acknowledgment of the documented abuses at the complex. Eramet, in a statement to Climate Rights International, noted that its planned Sonic Bay facility would have sourced ore from PT Weda Bay Nickel, itself the subject of a 124-page human rights report. But Tesla, which signed a $5 billion nickel supply deal with Indonesian producers, has not responded in writing to multiple requests from advocacy groups to explain its due diligence practices.
The Loeha Raya farmers watching for boreholes above Lake Towuti are in some sense representative of a much larger reckoning that global commodity markets have not yet fully absorbed. Indonesia holds 21 million tonnes of proven nickel reserves - the largest in the world. The International Energy Agency projects that global nickel demand will grow by roughly 61 percent by 2040 under a Paris Agreement-aligned scenario, even accounting for the shift toward LFP batteries. That demand has to come from somewhere. The question is not whether Sulawesi's nickel will be mined, but under what conditions, and who decides.
A 2024 analysis by Mighty Earth ranked PT Vale Indonesia's Sorowako operation as the highest-deforesting nickel mine in Indonesia, with 14,559 hectares of tree cover loss recorded between 2014 and 2022 - nearly six times the deforestation rate of the next-ranked concession. WWF has documented Indonesia as the world leader in mining-related deforestation overall, at 3,537 square kilometers across all metals, more than double any ot…