- Indonesia’s electric vehicle ambitions have seen it ramp up refining of nickel, a key component in EV batteries, at industrial estates springing up across the country.
- However, these smelters are powered by purpose-built coal-fired plants, which environmental activists say are causing illness, killing crops and polluting fish farms.
- Among the coal plants that activists say are polluting local villages are those that power the nickel smelters owned by Chinese companies PT Gunbuster Nickel Industry (GNI), PT Virtue Dragon Nickel Industry (VDNI) and PT Obsidian Stainless Steel (OSS).
- While Indonesia has stated its commitment to transitioning away from coal in powering its grid, these industry-exclusive “captive” plants aren’t subject to any kind of phaseout, and are in fact encouraged by regulation.
JAKARTA — As Indonesia positions itself to become a key global hub for electric vehicle batteries, it’s also putting people and the environment at harm through the coal-fired plants powering its nickel smelters, activists say.
These coal plants aren’t connected to the national grid. Instead, they exclusively serve the industrial estates cropping up across the country, mostly on the island of Sulawesi, to refine the nickel, cobalt, aluminum and other metals needed to make EVs and their batteries. And according to the Indonesian Forum for the Environment (Walhi), the country’s largest green group, these so-called captive coal plants are polluting the air, water and community lands.
As a result, crops are dying and people are falling sick from the pollution, the group says.
It cites the example of Chinese miner PT Gunbuster Nickel Industry (GNI), which owns a nickel smelter in an industrial estate in North Morowali district, Central Sulawesi province. To power the smelter, GNI built a captive coal plant on the site, for which it dammed a local river without residents’ knowledge, according to Sunardi Katili, who heads Walhi’s Central Sulawesi chapter.
When it rained, he said, the water spilled over from the river and flooded nearby farms and settlements.
And once the coal plant started operating, it polluted the air across five villages, Sunardi added.
“According to data from the local health clinic, around half of the villagers in the captive coal plant area are exposed to air pollution,” he said.
That hasn’t stopped GNI, which is currently expanding its captive coal plant, which sits less than half a kilometer from the village of Tanauge, Sunardi said.
GNI has denied the allegations, saying all its activities and operations comply with prevailing laws.
“Our construction and Company’s activity is supported by relevant legal permit,” the company said in an emailed statement to Mongabay. “We don’t commit any environmental pollution, while on the other hand, the Company is trying to contribute much attention to the society.”
Similar claims have arisen from an industrial estate in Southeast Sulawesi province, home to nickel smelters operated by two other Chinese companies, PT Virtue Dragon Nickel Industry (VDNI) and PT Obsidian Stainless Steel (OSS).
VDNI’s smelter is fed by a 530-megawatt captive plant that can burn through up to 180,000 metric tons of coal per year. OSS runs a much larger power plant, at 1,820 MW.
Both plants have given rise to a number of health and environmental issues, according to Andi Rahman, the head of Walhi’s Southeast Sulawesi chapter.
He said ash from the plants has polluted 151 hectares (373 acres) of fish ponds owned by locals. That has hurt one of the main sources of local livelihood, Andi said.
Some villagers have also complained of respiratory problems, he added.
“We talked to people in Motui village, and [they said] their front porches are covered with black ash every morning [from the coal plant emissions],” Andi said.
VDNI and OSS didn’t respond to Mongabay’s request for comment.
Walhi warns that the environmental and health damage caused by these captive coal plants will only increase as the government continues to hard-sell foreign investors to mine and process more nickel in the country.
As of the end of 2022, Indonesia had 13,000 MW of captive coal power projects considered under construction, according to a recent report by the Global Energy Monitor (GEM), which uses publicly available data on company plans.
“We are certain that with the massive need for batteries for electric cars in Europe and the U.S., the demand for nickel will also increase,” Sunardi said. “This growing demand will certainly result in construction of new smelters. So Europe’s demand for electric cars heavily affects the number of coal plants to be built in Sulawesi.”
Walhi has called for a moratorium on new captive coal plants.
“If these Chinese companies truly care about the environment and respect the people, then they should scrap their plans to build captive coal plants in Sulawesi,” said Muhammad Al Amin, the head of Walhi’s South Sulawesi chapter.
But a moratorium is impossible without first amending a 2022 regulation issued by President Joko Widodo to encourage the growth of “nationally strategic” industries like nickel processing. Under the regulation, new coal plants can still be developed and operate until 2050 as long as they are “integrated with industries that are built orientated to increase the added value of natural resources or are included in the national strategic projects that have a major contribution to job creation and/or national economic growth.”
This means that companies are free to build as much new coal power capacity as they want, as long as these plants serve refineries or metal smelters or if they can be considered nationally strategic projects.
The regulation also allows companies to build coal plants if they can commit to cutting greenhouse gas emissions by 35% within 10 years of operation.
“If the president is brave and is siding with the environment, just like what his administration claimed to be, then he should revise the 2022 regulation by scrapping the stipulation,” Amin said. “Once he does that, then we would be convinced that his statement in a number of international forums [about protecting the environment and transitioning away from coal] truly matches his actions.”
Banner image: The Obi island in North Maluku province is virtually surrounded by nickel mining sites and smelters. Image by Rabul Sawal/Mongabay-Indonesia.
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