Stay informed with free updates
Simply sign up to the Mining myFT Digest — delivered directly to your inbox.
US carmaker Ford, Brazil’s Vale, China’s Tsingshan and Hong Kong’s Jardine Matheson are invested in Indonesian nickel projects responsible for the clearance of large swaths of some of the world’s most biodiverse forests.
New data compiled by environmental group Mighty Earth and its partner Brown Brothers Energy and Environment shows that at least 76,301 hectares — an area the size of New York City — of tropical forests has been cleared within 329 nickel concessions. Roughly 23,000ha of that — or 30 per cent — has been cut down since 2019, as demand for electric cars and the nickel batteries that power them has increased.
With its vast nickel reserves, Indonesia hopes to become a global powerhouse in the electric vehicle supply chain. US Geological Survey data shows that last year it generated almost half of the world’s nickel.
But deforestation, coupled with waste, pollution, high carbon emissions and displacement of villages, has put pressure on the government and miners to clean up their act and on carmakers to search for alternative sources of nickel, such as Australia. President Joko Widodo said in March Indonesia would step up scrutiny of the sector and tell companies to reforest depleted mining regions.
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.
Environmental groups and analysts have warned Indonesia could repeat mistakes made in the palm oil industry, associated with rampant deforestation, unless more steps are taken to protect forests from nickel mining. “We are risking a palm oil 2.0 situation with deforestation for nickel mining,” said Mighty Earth senior director Amanda Hurowitz, referring to the havoc wrought to the environment by intensive farming of palm oil, a key ingredient in everything from deodorant to pizza.
Deforestation for palm oil plantation is a fifth of what it was at its peak — because of government action and companies’ voluntary initiatives to reduce or eliminate deforestation.
If the standards applied by palm companies today were to be applied by nickel miners then a lot of the concessions “couldn’t be touched” because of their biodiversity, Hurowitz said.
“Biodiversity loss is the biggest issue facing Indonesian nickel,” said a former mining executive in Indonesia. “It is an acute issue.”
“Being rich in natural resources, Indonesia has previously struggled to strike a balance between social and environmental protections and economic gains,” said Melissa Cheok, associate director at Sustainable Fitch, the rating agency’s environmental, sustainability and governance research business.
“If [Indonesia’s government] does not deliver on its pledges to protect the environment while mining for these metals, it would likely further undermine its commitment to the green transition and its overall credibility, which could hurt investor confidence.”
Independent experts said that the nickel concession data does not credit rehabilitation efforts and some clearance could be linked to agriculture projects — something which is still the responsibility of the mining companies that hold the concession.
Brazilian mining group Vale operates three of the top five projects with the highest level of deforestation. Vale’s Soroako, Pomalaa and Bahodopi sites on the island of Sulawesi show 19,638h of deforestation since 2014. Vale has partnered with China’s Huayou Cobalt and Ford on Pomalaa.
Vale said that it has rehabilitated 13,527 hectares of forest as of February — roughly 3,500 within its concessions and 10,000 outside — and its “leading standards in environmental stewardship and land management” are consistently recognised by the Indonesian government. It added it has cleared 5,481 hectares of land on its concessions.
A mining and production project on Sulawesi co-owned by local Indonesian company Bintang Delapan Group and its joint venture partner China’s Tsingshan, shows nearly 2,738h of canopy loss since 2010, according to Mighty Earth.
United Tractors, a subsidiary of Astra International, which is controlled by Hong Kong’s Jardine Matheson, last month bought a 20 per cent stake in Australia-listed Nickel Industries. Nickel Industries is a Tsingshan affiliate and owns a majority interest in the Hengjaya Mineralindo project. Around 271 hectares of that concession has been deforested, according to Mighty Earth Analysis.
“United Tractors will monitor and encourage good mining practices in Nickel Industries’ mines, including reclamation,” United Tractors said, adding that long-term the EV sector would help decarbonise the Indonesian economy.
Ford and Tsingshan did not respond to requests for comment. Huayou and Bintang Delapan did not respond to requests for comment.
Read the full article here
