Nickel mining and processing paves way for a clean energy transition as nickel is an important mineral for the development of electric vehicles (EVs). As demands for cleaner energy and EVs rose up, nickel rich countries like Indonesia are rushing to meet the demands by intensifying nickel production. The rise of nickel mining and processing, alongside advances in battery technology, has impacted the long-term decline of the cost of lithium-ion batteries for EVs, supporting the affordability of EVs. However, there are many cases where both processes led to the destruction of the environment and displacement of locals. Mining in particular can cause irreparable damage because it often encompasses very large areas, in many cases, takes place on islands, which threatens the ecosystem and the livelihood of the islanders. This led to a paradox where intentions for the transition of fossil fuels into clean energy via batteries has led to a widespread destruction because of raw material extraction such as nickel, also known as green paradox.
Indonesia is at the center of this paradox, as it currently holds the world’s largest nickel production and reserve. According to the U.S. Geological Survey, Indonesia’s reserves are estimated at 55 million tons, roughly 42% of global reserves. In 2024, Indonesia also produced about 2.2 million tons of nickel ore, more than six times that of the next largest producer. This makes Indonesia a major player of the global energy transition which is noticed by the Indonesian government. Rather than exporting raw nickel ores, nickel processing is to be developed more in a project called Hilirisasi Nikel. Hilirisasi Nikel is an ambitious downstreaming project aiming to process nickel ores so they can be turned into stainless steel or lithium-ion batteries. This certainly pushes Indonesia into becoming a major player in the energy transition and even generated some buzz from developed countries who aren’t able to capitalize on raw ores from Indonesia anymore. However, this push came with a big environmental cost as extracting and processing a massive amount of ores has led to the destruction of many locations in Indonesia.
The downstreaming of nickel has enabled a massive granting of mining concessions in Sulawesi, The Maluku Islands, and Papua. For example, it was reported that in North Maluku there are 127 mining business permits (IUPs) covering a total of 655,581.43 hectares, in which more than half of them are nickel-specific. Nickel mining operations range from large industrial hubs, which include processing, to small remote islands, which both have caused serious environmental pollution and the displacement of locals. All this operation poses a very huge health risk because of its heavy metal and dust that could pollute the air and water. There are a lot of cases where locals can’t use water for their daily needs because it is polluted which can cause irritation and even increase cancer risk. Over time, large areas of forest have been cleared too with some even observable using Google Maps.
An example of all this destruction is the widely documented destruction of Gebe Island, North Maluku. The 22,400 hectare island suffered one of the worst effects of nickel extraction in Indonesia where there are at least 8 active mines at the same time. As a tiny island, the destruction of Gebe has a devastating effect. These nickel operations have reportedly dried up water sources, withered community plantations, and polluted fishing grounds. Another example is Konawe, Southeast Sulawesi, where the nickel concession area is plentiful and located in river basins. The downstreaming and mining operations have cleared forests and reduced water absorption of the land resulting in floods and soil erosion. If nickel extraction keeps being operated near river basins, then floods will keep on happening in Konawe. In the last 5 years, the livelihood of the locals are threatened because of the destruction of rice fields and pollution to the sea which could cause a food crisis.
At the end of the day, despite nickel being promoted as essential to the global clean energy transition, its extraction in Indonesia has caused widespread environmental destruction. This contradiction, the so-called green paradox, highlights the tension between sustainability rhetoric and extractive reality. Perhaps Indonesia really is playing a huge role for a better sustainable future, however this does not excuse the country from the ecological and social costs of nickel extraction. Hilirisasi Nikel policy has been promoted as a success story of green industrialization, but in practice it often functions as greenwashing as it obscures all the deforestation, pollution, and displacement that accompany the industry.
Outside of Indonesia, the Philippines, Australia, and New Caledonia are also rich in nickel, but not at the same height as Indonesia. China imports a whopping 93% of processed nickel from Indonesia while also being a major investment partner with the country. This resource dominance explains why Indonesia is so determined to push Hilirisasi. It is not just about resource nationalism, but also about positioning Indonesia as an important active player in the global energy transition. With the U.S. and China racing each other in a green industrial race, Indonesia sees an opportunity to extract the maximum economic and political leverage. Yet, this determination has caused massive destruction that is dismissed as the price of sustainability.
Becoming a node in the global energy transition is no easy task, but sacrificing citizens and ecosystems in the process undermines the notion of sustainability. Indonesian nickel reveals a green paradox where the stakes for it are at the geopolitical level, making the voices of its citizens sidelined. On the surface, it may seem that this is just about states and markets, but there are actual communities like Gebe and Konawe that bear the brunt of the clean energy transition. We, including investors and importers, need to back genuine sustainable practices rather than greenwashing. Otherwise, Indonesia risks maintaining its “World’s Largest Nickel Holder” prestige at the cost of its own citizens and land.