Indonesian President Joko Widodo visited Washington last weekend along with other Southeast Asian leaders, while his US counterpart Joe Biden wants to court the region against growing Chinese influence.
Most important points:
- Elon Musk marks partnerships between Tesla and Space X in Indonesia, which has the world’s richest nickel reserves
- Environmental groups say nickel mining in Indonesia has created environmental and health hazards
- Coal-fired energy drives nickel mining on Sulawesi Island, the source of much of Indonesia’s nickel
But it was a trip to the small town of Boca Chica, Texas, which attracted more attention back home in Indonesia.
Widodo had 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.
While Mr. Widodo praised the tech baron as a “super genius,” Mr. Musk stated that he was “very interested” in the future of Indonesia, a country of 270 million people.
The richest man in the world also said the country radiated “positive energy”.
“We are going to try, from a Tesla and Space X point of view, to do some partnerships in Indonesia,” Musk said, marking “future collaboration on many fronts.”
Indonesia, Southeast Asia’s largest economy, is trying to cash in on the global transition to electric vehicles (EVs) by attracting foreign investment from the likes of Mr. Musk.
Nickel is an important component of lithium-ion battery cells, which are used in most EVs.
The demand for the metal is therefore increasing rapidly.
Sumitomo Metal Mining — Japan’s largest nickel smelter and supplier of the Panasonic lithium-ion batteries used in Tesla EVs — said in March it expected global demand for nickel alone to grow 20 percent by 2022.
According to research firm Wood Mackenzie, nickel consumption for EV batteries is expected to increase by 64 percent between 2019 and 2025.
Indonesia, along with Australia, has the world’s largest nickel reserves, according to the US Geological Survey (USGS), a US government agency.
USGS reports that mining production in Indonesia has increased by 30 percent in 2021, which it attributed to the “ongoing commissioning” of projects in the resource-rich archipelago.
Mr Widodo’s visit to Space X followed a recent meeting between Mr Musk and High Minister Luhut Binsar Pandjaitan, and Indonesian officials told Reuters there had already been working-level discussions on investments in the nickel industry.
Indonesia’s Investment Minister Bahlil Lahadalia said Musk would face “losses” if he did not invest in the country.
Musk ‘fired up’ over Indonesia
“I love that Indonesia has a large population and the population is growing,” Musk said during his meeting with Widodo in Texas.
“This is very good. Because, for example, we need a lot of people for the future – and also for Mars. Mars has no people, so we need people for Mars,” he joked.
“Indonesia seems very optimistic and positive about the future, which is great,” Musk added.
But not everyone is so excited about the prospect of further investment in Indonesia’s nickel mining, which is associated with coal-fired power plants.
A group of Indonesian environmentalists has written to Mr. Musk, pointing to the billionaire’s previous statements about environmental sustainability.
“If Tesla wants to invest in Indonesia, they have to free it up from coal plants,” Pius Ginting, coordinator of the Action for Ecology and People’s Emancipation Association (known by its Indonesian abbreviation AEER), said in the letter.
“Because this conflicts with the goal of electric transport: to reduce overall gas emissions,” he added.
In mid-2020, Mr. Musk called on mining companies to ramp up their nickel production to meet Tesla’s needs.
“Tesla will give you a huge contract for a long period of time if you mine nickel efficiently and in an environmentally friendly way,” Musk said at the time.
Indonesia has long strived to boost domestic processing of nickel ore and other minerals — not just to export the raw product — in part as a way to create local jobs.
But Indonesia’s nickel smelting 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 construction of new coal-fired power plants after 2023, coal generation remains a major source of energy, accounting 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 damage caused by mining companies on the island of Sulawesi – the source of much of Indonesia’s nickel.
“Nickel mining has violated residents’ right to breathe clean air,” Mr Taufik, coordinator of Mining Advocacy Network (JATAM) in Central Sulawesi Province, told ABC.
A 2019 study found by AEER that coal-fired power stations used to produce nickel in the town of Morowali in Central Sulawesi had caused respiratory infections in local residents.
AEER reports that disposal methods by nickel plants in Sulawesi “pose a serious 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 doesn’t plan to throw out hazardous waste that will be used as a raw material for electric vehicles. [into] the sea in Morowali and other regions,” said Mr Taufik.
AEER states that when the small-scale nickel mining operations in Morowali began in the late 2000s, traditional farmers in the area were affected by flooding exacerbated by the mining 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, flooding two villages and forcing 175 residents to evacuate.
Mr Taufik said the Indonesian government must also consider the implications for residents if Tesla ever builds a facility in Sulawesi.
“The government needs to determine whether this decision will benefit the local population or just lead to land disputes between the company and residents,” he said.
“Tesla’s decision to come and build a power plant could remove residents from their living or working areas, such as farms.”
“This is very likely to happen and local residents will certainly lose.”
Indonesia’s Environment Ministry did not respond to requests for comment. Tesla was also approached for comment.
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