With the world’s largest reserves of nickel, used extensively in making batteries, Indonesia is aiming to become an electric vehicle powerhouse, not least by courting Tesla CEO Elon Musk.
But to attract the investment needed to become an electric vehicle (EV) manufacturing hub, experts say Indonesia must avoid repeating environmental mistakes from the past, when decades of unregulated mining turned parts of its main tin-producing islands into a lunar landscape.
In just three years, Jakarta has signed deals worth about US$15bil (RM66bil) for battery and EV production, while President Joko Widodo – who visited the nickel mining town of Sorowako on Sulawesi island this week – has personally tried to persuade Tesla’s Musk to invest.
But questions over environmental and legal safeguards could make investors wary as they seek to safeguard their reputations.
Danny Marks, assistant professor of environmental politics and policy at Dublin City University, said mining still faces significant environmental challenges.
He cited decades of unregulated tin mining in the Bangka-Belitung islands, off the southeast coast of Sumatra island, that has destroyed forests and coral reefs, leaving piles of white tailings, large craters and acidic, turquoise lakes.
“Indonesia should heed the lessons from its tin mining experiences which caused numerous deaths due to mining accidents, was linked to child labour, and permanently scarred the island of Bangka’s landscape,” Marks said in an interview.
“EV companies do not want their supply chains to be similarly tainted,” he said. “The Indonesian government must immediately strengthen their environmental safeguards so similar problems won’t arise from nickel mining.”
Electric vehicle production and sales are surging globally, with the sector seen as key in the drive to curb climate change by cutting emissions from petrol and diesel, reduce oil imports and fuel subsidies, and support investment in renewable energy.
But in South-East Asia, EVs accounted for less than 2% of sales in 2022, according to consultancy firm McKinsey & Company, and governments are introducing incentives for auto and battery makers, tax breaks for buyers, and setting ambitious targets to become EV manufacturing hubs.
Rahul Gupta, an associate partner at McKinsey in Singapore, said Indonesia has attracted investments in battery production and vehicle assembly, while Vietnam and Thailand have won business in EV assembly and components like motors.
Besides nickel, Indonesia is also blessed with reserves of cobalt and copper, other essential materials for EV batteries.
But making battery-grade nickel produces high planet-heating emissions, so Indonesia has to shift from coal power plants to renewable energy to lure the likes of Tesla and achieve its ambitious EV goals, analysts said. — Reuters
