Fuelling the EV Boom: The Cost of Indonesia's Nickel Refineries

Why It Matters

The sustainability of Indonesia’s nickel supply directly affects the credibility of electric‑vehicle emissions reductions and poses material risks for automakers and investors worldwide.

Key Takeaways

• Indonesia's nickel boom transforms rural villages into industrial hubs
• Coal-powered refineries emit massive CO2, undermining EV green claims
• Local communities face water scarcity, dust, and health hazards
• Government pledges 81% emission cut by 2045, timeline criticized
• Expanding concessions risk worsening environmental impacts without immediate action

Summary

Indonesia’s surge in nickel refining is reshaping remote coastal communities into industrial centers as global demand for electric‑vehicle batteries explodes.

The archipelago now produces roughly 2.2 million tonnes of nickel annually, most shipped to China and South Korea. To keep costs low, refineries rely on coal‑fired power, releasing millions of tonnes of CO₂ each year and contaminating rivers that once supplied fresh water to villages like Weda Bay.

Residents describe choking dust, dried‑up streams and health problems, while a mining‑advocacy spokesperson warned that “the carbonisation effort … needs to happen now.” The government has pledged an 81 % emissions cut by 2045, a timeline activists deem too distant.

If unchecked, the environmental toll could tarnish the EV sector’s green narrative, trigger stricter regulations, and force automakers to reassess supply‑chain sourcing, making Indonesia’s policy choices pivotal for the industry’s future.

Original Description

The rapid expansion of nickel refineries in Indonesia is turning rural areas into industrial hubs. While there's profit to be made amid the global boom in electric vehicles, there's undeniable cost for those on the ground. Indonesia is the world's largest nickel supplier. In the past decade, hundreds of mining permits have been issued, covering a total concession area of nearly 10,000 square kilometres. Indonesia produces about 2.2 million tonnes of nickel a year. CNA's Nivell Rayda travelled to Indonesia's nickel powerhouse, North Maluku.