Indonesia’s President Joko Widodo visited Washington last weekend along with other South-East Asian leaders, as his US counterpart Joe Biden seeks to court the region against growing Chinese influence.
Key points:
- Elon Musk flags Tesla and Space X partnerships in Indonesia, which has the world’s richest nickel reserves
- Environmental groups say nickel mining has caused environmental and health hazards in Indonesia
- Coal-fired energy powers nickel mining on the island of Sulawesi, the source of much of Indonesia’s nickel
But it was a trip to the small town of Boca Chica, Texas, that attracted more attention back home in Indonesia.
Mr Widodo had lined up a high-profile meeting with Tesla and Space X founder Elon Musk at the private space agency’s headquarters, where he was given a private tour.
As Mr Widodo praised the tech baron as a “super genius”, Mr Musk declared he was “very interested” in the future of Indonesia, a country of 270 million people.
The world’s richest man also said the country exuded “positive energy”.
“We’re going to look, from a Tesla and Space X standpoint, to try and do some partnerships in Indonesia,” Mr Musk said, flagging “future collaboration on many fronts”.
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Indonesia, South-East Asia’s largest economy, seeks to cash in on the global transition to electric vehicles (EVs) by luring foreign investment from the likes of Mr Musk.
Nickel is a key component of lithium-ion battery cells, which are used in most EVs.
So demand for the metal is rapidly increasing.
Sumitomo Metal Mining — Japan’s largest nickel smelter and a supplier for the Panasonic lithium-ion batteries used in Tesla EVs — said in March it expected global demand for nickel to increase by 20 per cent during 2022 alone.
According to research firm Wood Mackenzie, nickel consumption for EV batteries is projected to increase 64 per cent between 2019 and 2025.
Along with Australia, Indonesia has the world’s largest nickel reserves, according to the US Geological Survey (USGS), an American government body.
USGS reports that mine production in Indonesia increased by 30 per cent during 2021, which it attributed to the “ongoing commissioning” of projects across the resource-rich archipelago.
Mr Widodo’s visit to Space X followed a recent meeting between Mr Musk and senior minister Luhut Binsar Pandjaitan, and Indonesian officials told Reuters that working-level discussions on investment in the nickel industry had already taken place.
Indonesia’s Minister for Investment, Bahlil Lahadalia, said Mr Musk would “lose out” if he did not invest in the country.
Musk ‘fired up’ about Indonesia
“I think it’s great that Indonesia has a big population and the population is growing,” Mr Musk said during his meeting with Mr Widodo in Texas.
“This is very good. Because, like, we need a lot of people for the future — and also Mars. Mars does not have any people, so we need people for Mars,” he joked.
“Indonesia seems very optimistic and positive about the future, which is awesome,” Mr Musk added.
But not everyone is so excited by the prospect of further investment in nickel mining in Indonesia, which is associated with coal-fired power plants.
A group of Indonesian environmental activists have written to Mr Musk, pointing to previous statements the billionaire has made around environmental sustainability.
“If Tesla wants to invest in Indonesia, they should make it free from coal-fired power plants,” said Pius Ginting, coordinator of the Action for Ecology and People’s Emancipation Association (known by its Indonesian acronym AEER), in the letter.
“Because doing so conflicts with the aim of electric transportation: reducing total gas emission,” he added.
In mid-2020, Mr Musk called upon mining firms to boost their production of nickel to meet Tesla’s needs.
“Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way,” Mr Musk said at the time.
Indonesia has long sought to boost domestic processing of nickel ore and other minerals — not just exporting the raw product — partly as a way to create local jobs.
But smelting nickel in Indonesia often relies on energy from coal, and environmentalists say the country’s nickel industry does not meet “environmentally sensitive” standards.
While Indonesia has committed to ending the construction of new coal-fired power plants after 2023, coal power generation remains a key source of energy and accounts for more than a third of the country’s total carbon emissions.
Locals’ ‘right to breathe’ violated by nickel, activist says
Moh Taufik hopes Tesla will consider environmental harm caused by mining companies on the island of Sulawesi — the source of much of Indonesia’s nickel.
“Nickel mining activity has violated residents’ rights to breathe in clean air,” Mr Taufik, coordinator of Mining Advocacy Network (JATAM) in the province of Central Sulawesi, told the ABC.
A 2019 study by AEER found that coal plants used for the production of nickel in the Central Sulawesi town of Morowali had caused respiratory infections among local residents.
AEER reports that disposal methods by nickel plants in Sulawesi pose “a grave threat to the rich marine life in Indonesia’s seas” and affect the livelihoods of fishermen.
“If the company wants to invest in the area, hopefully it’s not planning to throw hazardous waste used as raw materials for electric vehicles [into] the sea in Morowali and other regions,” Mr Taufik said.
AEER argues that when small-scale nickel mining operations began in Morowali in the late 2000s, traditional farmers in the area were affected by floods exacerbated by the extractive industry.
Morowali is now the site of the largest nickel-based industrial area in Indonesia, funded by domestic and Chinese investors.
And in 2020, flash floods hit Morowali, swamping two villages and forcing 175 residents to evacuate.
Mr Taufik said the Indonesian government must also weigh the consequences for residents if Tesla ever builds a facility in Sulawesi.
“The government have to determine whether this decision will benefit local residents or will just trigger land conflicts between company and residents,” he said.
“Tesla’s decision to come and build a power plant might remove residents from their living or working areas, like farms.”
“This very likely to happen and local residents will definitely lose.”
The Indonesian Environment Ministry did not respond to requests for comment. Tesla was also approached for comment.
