The Dirty, Deadly Forges of Sulawesi

Nickel is pouring into the EV supply chain from an Indonesian industrial park with a history of fatal accidents. By Matthew Campbell and Annie Lee

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Episode Transcript

Speaker 1 (00:01):
The dirty, deadly forges of Sulawesi. Nickel is pouring into
the EVS supply chain from an Indonesian industrial park with
a history of fatal accidents. By Matthew Campbell and Annie Lee.
Early in the morning last Christmas Eve, Chinese and Indonesian
workers prepared for a maintenance operation at the Indonesia Morowali

(00:23):
Industrial Park, a complex of factories, smelters and power plants
on the island of Sulawesi. I mip erupts in a
tangle of pipelines and smokestacks that belch particulates into the
tropical air. The bulk of the tens of thousands of
employees lived just outside its walls, migrants to a city
of plywood and sheet metal shanties that shelter motorbike shops

(00:46):
and dingy rooming houses. The workers had been tasked with
fixing a submerged arc furnace which melts nickel ore at
temperatures around fourteen hundred degrees celsius. Over time, the residue
of this process as slag, can build up and the
furnace overheats. On this day, the plan was to replace

(01:06):
heat damaged bricks in the inner chamber and remove slag.
With the furnace turned off, a technician began slicing into
its steel shell with the flame cutter to allow access
to the interior, but someone had miscalculated the slag inside
hadn't cooled enough. In fact, it was still molten. The
slag surged out from the cut, and the wall of

(01:27):
the furnace collapsed. According to people familiar with the incident
who asked not to be identified discussing non public information,
ascetylene canisters left nearby used to fuel the flame cutters
started to explode from the surging temperature. The workers trying
to contain the damage were hamstrung by communication difficulties, with
virtually none of the Chinese staff able to speak fluent

(01:49):
Indonesia and vice versa. As the sun rose flames licked
at the exterior of the factory building, which billowed with
dark smoke, workers tried frantically to aid their colleagues, many
of whom had severe burns. Screaming for help, one group
hoisted a blood covered man into the bed of a
pickup truck, which was already crowded with other victims. The

(02:11):
on site medical clinic was overwhelmed, Still in their tan uniforms.
Injured men lay on the floor crying out in pain
as nurses attended to those they could. By early afternoon,
a dozen employees were confirmed dead, with many more in
need of intensive care. The toll would soon rise to
twenty one men, eight of them Chinese, thirteen Indonesian. One

(02:34):
of the dead was Tofik, a forty year old mechanic
from another part of Sulawesi. Like many Indonesians, he used
only one name. With overtime, he could earn eight million
rupia about five hundred dollars a month, a respectable wage
in rural Indonesia, but he found the job exhausting and
had been thinking about quitting to return to his wife,
ich Firiwati and their children, who'd stayed behind in his

(02:57):
home village. On Christmas Eve, Ice had set out to
visit him, a fifteen hour journey. She was on the
road when one of his friends called to tell her
that Tofique was among the victims. He and the others
killed in the fire died in the service of one
of the greatest industrial transitions in modern history. Over the
past decade, Sulawesi and other Indonesia islands have been transformed

(03:21):
into hubs for mining and processing nickel. The metal is
a crucial component for making stainless steel, the purpose of
the facility where the explosion occurred. It's also essential to
many electric vehicle batteries. The government of outgoing President Djoko Widodo,
who's better known as Jocoe, has enthusiastically promoted the nickel
industry's growth, seeing a chance to put Indonesia at the

(03:44):
center of global supply chains and to create employment for
the country's roughly two hundred and eighty million people. Controlled
by Chinese metals giant ching Shan Holding Group I MIP,
is the product of more than thirty billion dollars in investment.
Sprawling across what was once a plane of farmers fields
and fishing hamlets on Sulawesi's eastern shore, a short distance

(04:06):
from nickel mining concessions that dot the surrounding hillsides, it
boasts its own seaport and airport, along with a resort
style hotel for visiting executives. IMP has created immense numbers
of jobs, with more than one hundred thousand employees and contractors,
and accounts on its own for a major percentage of
Indonesia's exports of nickel suitable for batteries. Overall, the nickel

(04:30):
industry has helped deliver rapid growth for Indonesia's economy, the
largest in Southeast Asia. That success has a dark side.
December's fire was the worst in a long series of
fatal accidents at Imip and other Indonesian nickel sites. Workers
have been buried under slag, crushed by heavy equipment, and
killed in falls in surrounding communities. Residents complain of respiratory

(04:55):
ailments they blame on pollution from smelters and the coal
fired power plants that sustain them, and environmentalists accused the
nickel industry of flouting regulations intended to protect ecologically sensitive
islands such as Sulawesi, while expanding production of a material
critical to the evs. Western governments are promoting on environmental grounds.

(05:16):
In most cases, automanufacturers don't directly source battery materials, and
it's difficult, if not impossible, to trace the metal in
a given car to a specific nickel facility. But an
extensive review of Chinese, Indonesian, South Korean and US corporate
filings by Bloomberg BusinessWeek, as well as interviews with industry
experts shows that nickel from IMIP is present in the

(05:39):
supply chain that feeds virtually every major seller of evs,
notably companies processing nickel. There have direct or indirect supply
relationships with many of the world's largest manufacturers of batteries
and battery materials, including South Korea's LG KEM, Samsung, SDI,
and sk Innovation. There's a strong long chance that metal

(06:01):
is being used or soon will be in at least
some cars manufactured by Tesla, as well as BMW, Ford,
General Motors, Hyundai, Stellantis, and Toyota, among others. Each of
these companies has adopted extensive pledges on responsible sourcing and
markets its electric offerings as better for the planet than
traditional gas guzzlers. They nonetheless depend on workers who perform dirty,

(06:25):
dangerous jobs with few safeguards. In a statement on Behalf
of Itself and Ching, Shan, IMIP said that safety is
always our priority and that it quickly required all enterprises
to carry out safety risk screening and rectification after the
Christmas Eve accident. It added that companies operating in the
complex must comply with all local environmental laws and regulations,

(06:49):
as well as internal pollution guidelines. LGKEM and Eska Innovation
didn't respond to requests for comment about their links to IMIP.
Samsung SDI declined to comment. Tesla and Hyundai didn't respond
to requests for comment. Other car makers contacted by BusinessWeek
emphasize that they don't have direct business relationships with IMIP,

(07:11):
but said they expect companies in their supply chains to
comply with labor and environmental standards. Indonesia's Ministry of Energy
and Mineral Resources said it diligently supervises safety at nickel
sites and is working to address health concerns. The December
explosion brought considerable scrutiny to IMIP, with Indonesian politicians declaring

(07:32):
that nothing like it should be allowed to happen again.
But no one in power in Indonesia is seriously proposing
curtailing the expansion of the nickel industry, which would jeopardize
the investment and jobs it brings. Nor do international car
makers have much of an alternative to it if they're
to meet their electrification goals profitably. With its cheap workers

(07:53):
and cheap coal, Indonesia offers a dramatic cost advantage compared
with other sources. Of nickel, which include Australia and Canada.
That's especially important as growth in demand for EV's slows,
pressuring manufacturers to make them more affordable. Tesla reported a
slump in deliveries in the first quarter, missing analysts estimates
by the largest margin on record. Ford Motor has slashed

(08:16):
production of its flagship electric pickup, the F one to
fifty Lightning, and companies including General Motors and Volkswagen have
delayed or shelved EV plans. At the same time, the
massive expansion of the industry in Indonesia has led to
a slump in global nickel prices, forcing the shut down
of mines in Australia and destroying the business case for

(08:37):
new ones there and in other high cost locations. By
twenty thirty, Indonesia may account for nearly two thirds of
the global nickel supply, according to forecasts from Bloomberg in ef,
up from about forty seven percent last year. That reality
alarms the Indonesians, trying to stop the nickel sector from
leaving a trail of destroyed ecosystems and dead workers every

(09:00):
concession sold. More destruction and damage will also follow, says
Imam Chaufwan, head of Research at JATAM, a Jakarta based
environmental group. We are very afraid of the future of
this nickel industry. Nickel increases the energy density of battery cells,
allowing a car to drive farther on a single charge.

(09:23):
There's an alternative, lithium iron phosphate batteries known as LFP
because of the chemical symbol for iron, which don't use
nickel at all, but their energy density is typically lower
and car makers have hesitated to use them in higher
end vehicles. Indonesia's nickel reserves are the world's largest, but
they were long considered to be too low grade for

(09:44):
use in batteries. Indonesians themselves received little of the benefit.
With its poor infrastructure and modest industrial base. The country
shipped its nickel or overseas for processing, largely to China.
Two factors combined to change this. The first was a
twenty fourteen decision by then President Susilo Bambang Yudoyino to

(10:05):
ban exports of unprocessed nickel ore. The initial goal was
to force companies to invest in domestic processing plants, where
nickel ore would be smelted in blast furnaces to separate
the valuable metal. Under Jocoi, who took office later that year,
the effort became more ambitious, with the government pushing for
Indonesia to participate at every level of the ev industry,

(10:28):
from mining nickel to fabricating batteries and assembling finished cars.
The second development was a series of breakthroughs by Chinese
companies in a technology called high pressure acid leeching. In
HPAL plants, low grade nickel ore is placed into pressure
vessels where it's treated with sulfuric acid and heated. After that,

(10:48):
the nickel that separates out will be suitable for batteries
once it's refined. HPAL requires less energy than other types
of nickel processing. The downside is that it generates huge
amount ounce of waste known as tailings. Indonesian nickel processors
use a disposal system known as dry stacking, where tailings
are dried until they can, in theory, be compacted and

(11:11):
piled up for outdoor storage. But nothing stays dry for
long in a humid tropical archipelago, and environmentalists worry that
stacked tailings could leach chemicals into the soil. Earthquakes and landslides,
both common in Indonesia, could tip tailings down slopes or
into waterways. IMP said in its statement that tailings are

(11:32):
disposed of with tools such as anti seepage membranes to
prevent leaks, and that groundwater is monitored for contamination. Indonesia
nonetheless permitted dry stacking to powerful Chinese metals producers. The
nation had it all enormous supplies of nickelre workers and coal,
as well as generous government incentives. Research provider Wood Mackenzie

(11:56):
estimated last year that the capital cost of an HPAL
plant in Indoniesisia works out to about thirty thousand dollars
for each metric ton of nickel produced annually, compared with
closer to one hundred thousand dollars elsewhere. The Chinese company
that most aggressively took advantage of this new opportunity was
qing Shan, based in the eastern city of One Sho.

(12:17):
It's the top producer of nickel globally. Qingshan had first
agreed to build IMIP in a remote but nickel rich
district called Morowali in twenty thirteen. An Indonesian conglomerate, Bintung
Delapan Group is also a minority investor in the complex,
but advances in HPAL, as well as another breakthrough by Qingshan,

(12:38):
which developed a method for upgrading a low end product
called nickel pig iron, supercharged its growth. In twenty twenty,
IMIP hosted nineteen separate enterprises, covering an area of about
two thousand hectares just under eight square miles. By the
middle of last year, the number of tenants had ballooned
to fifty two, while its physical mentions had grown more

(13:01):
than fifty percent. It's now about ten times the size
of Manhattan's Central Park. Imp is a self contained industrial city.
Much of the nickel ore it requires as mind in
the immediate area, then trucked down hauling roads to smelting facilities.
Once it's been transformed into intermediate nickel products, the material

(13:21):
is loaded onto bulk carrier vessels at imip's own port
jetties and sent to China for further processing. Coal for
its on site generating plants comes the other way, shipped
in from other parts of Indonesia. Such captive plants, which
serve a specific industrial site rather than the regional grid,
now make up about a fifth of Indonesia's coal power capacity.

(13:44):
At IMIP, ching Shan functions in part as a landlord
and contractor supplying shared services such as power and port access,
but it also operates its own smelters and other industrial facilities,
and has minority ownership positions in those operated by others.
Workers are often hired through subcontractors or third party staffing agencies,

(14:06):
which may have their own ties to Qingshan or other
IMIP investors. The upshot is that it's hard to financially
disentangle any one entity operating in IMIP from Qingshan or
from the overall operations of the complex. IMIP said, each
tenant company is an independent legal entity that's responsible for

(14:26):
its own business activities. The model has worked well enough
that Qingshan is replicating it about four hundred and fifty
miles away on the island of Kalmahera in a development
called Indonesia Wedda Bay Industrial Park. Other companies are developing
nickel facilities across the country. According to Project Blue, a
provider of data on clean energy raw materials, twenty hpal

(14:49):
projects are under development in Indonesia, dwarfing the number in
every other nation combined. Long before arriving at IMIP, along
the narrow highway that traces the shore of the Banda Sea,
you see the haze, a soup of emissions from smelters
and power plants, as well as dust from mine sites

(15:09):
and coal depots. Sometimes tinted brown, sometimes a thick gray,
It shrouds the nearby mountains and hovers over the water,
lending the landscape to the pallor of deli. Squint through
it and you can spot the mining concessions, broad swathes
of hillside where trees and soil have been torn away
to access the nickel ore beneath. Down slope, waterways are

(15:31):
rusty red from the runoff. Closer to the complex, the
traffic thickens, with uncountable motorbikes, their drivers wearing the yellow
safety helmets that mark them as IMP employees, heading to
or from their shifts. Piles of trash line the roadside.
A small stream that passes underneath is so choked with
water bottles, plastic bags, and takeout containers that the water

(15:55):
can barely flow. Closer still, a maze of ramps and
catwalks appears overhead, connecting the smelters, which are sided on
a plateau flattened to industry friendly dimensions, to the port.
A constant procession of red dump trucks carries coal uphill
from arriving ships. Before ching Shan invested here, this area

(16:15):
was desperately poor. Twenty four hour electricity arrived only in
twenty eleven. Some residents recall that when they were children,
their families couldn't afford rice. Their staple food instead was sego,
a low nutrient starch extracted from the trunks of palm trees.
The region has since undergone a boom. Government statistics show

(16:36):
that Morowali's economy grew almost six hundred percent from twenty
fifteen to twenty twenty two, and IMIP has attracted workers
from all over Indonesia. Thousands of Chinese staff have also arrived,
often taking more specialized engineering and technical roles, paid several
times more than their Indonesian counterparts. They live on site

(16:56):
and rarely, if ever, go outside the IMIP perimeter. Very
little of the money invested in IMP has filtered into
the community. The main road devolves in places into tire
swallowing water filled potholes. Beyond that, the streets are mostly
unpaved and turned to mud when it rains. I mip's

(17:17):
power plants have a combined current capacity of over fifty
three hundred megawats, more than the largest nuclear facilities in
the US, and huge piles of coal are stored in
plain sight. But outside its perimeter, the grid can't meet demand,
and businesses use generators to keep their lights on through
frequent blackouts. They are a luxury beyond the budget of

(17:38):
most local workers, who crowd into closet sized rooms in
makeshift dormitories and take their meals in roadside stalls selling
fried chicken or offal stew. Even then, many struggle to
earn a living that allows for more than day to
day subsistence. Anissa, a thirty six year old single mother
who works in i mip's catering department, explain that she

(18:00):
makes around six million rupia per month, about three hundred
and seventy dollars. Like other nickel industry employees interviewed for
this story, her name has been changed to protect her
from repercussions for speaking to reporters how to survive trying
to fulfill our needs with that number? She asked. An
unfurnished room costs up to one point five million rupeia

(18:21):
per month, and daily essentials in the remote region are
far more expensive. Than in other parts of Indonesia. A
canister of cooking gas can cost fifty five thousand rupia,
more than double the price charged in Makassar, a city
of about one point five million that's Suluesi's largest. Anissa
said she worries that her income is coming at the

(18:42):
expense of her health. When pollution is severe, she said
it can be hard to breathe. The dust is the worst.
It affects the face, the eyes, but she sees little
alternative to her current situation. Away from IMIP. There aren't
many jobs in rural Sulawesi. There is no other choice,
she said. I M I P said its wages are

(19:05):
much higher than those of other local employers. While the
long term effects of exposure to the pollutants at I
M I P are unclear, the information available suggests residents
are at risk. The greatest impact on air quality is
from the coal power plants, especially on the community around
the facility, and all the communities see the dust in

(19:25):
their homes, said Abdul Malik, head of the Community Hell
Center in Bahodopi, a town immediately adjacent to I M
I P. In the lobby, families crowded into the waiting
area seeking attention. Respiratory illnesses are the most common complaint
outside assign urged residents to get used to wearing a
mask when leaving the house to protect from pollution. As

(19:48):
Malik spoke, an assistant with a laptop pulled up statistics
on respiratory diseases such as tuberculosis. TB is quite common
in Indonesia, but the concern is the number of local infectiontions.
Malik said, based on national and regional trends, the center
expected to see around seventy four cases in twenty twenty two. Instead,

(20:09):
it logged one hundred and seventeen, fifty eight percent above
the estimate. While TB is caused by a bacterial infection,
medical researchers have observed that it's more common among people
exposed to significant air pollution. Still, daily life continues, albeit
at a proximity to heavy industry that would be unimaginable

(20:29):
in much of the developed world. Farther down the shore,
where I MIIP is aggressively expanding into a town called Laboda,
the gray tower of one of its coal plants hovers
over an elementary school. The schoolyard an expanse of bare
rocks and dirt with a forlorn volleyball net lies directly
in the smokestack's shadow. Of course, there are effects from

(20:51):
the plant. It's hard to breathe, you cough, said Hasrawati,
a thirty one year old English teacher. If we don't
wear glasses, you feel the dust in your eyes. Sometimes,
she said, so much blows into the school that if
we walk on the floor we can see our footprints.
With the government strongly supportive of IMP's growth, some of

(21:12):
its critics are trying to appeal to international audiences. When
BusinessWeek visited late last year, there were large posters printed
in English above the main road in La Bota. Their
headings indicated they were addressed somewhat optimistically to the United
Nations High Commissioner for Human Rights and the Executive director
of the UN Environment Program. Come and help us, they said,

(21:36):
in red capitals. The owner of the motorcycle shop next door, Bahar,
explained that the posters had been put up by an
activist from Makassar. Bahar said he had no expectation that
the situation would improve. We feel like we are alone.
No one is trying to help or to hear our voice.
Between drags on a cigarette, he hiked up the leg

(21:57):
of his trousers to reveal pink ulcer like sowreds, each
surrounded by a circle of darkened skin. A local medical clinic,
he said, had told him they were caused by exposure
to coal residue. Despite the tens of billions of dollars
spent on Morowali's nickel industry, Bahar said, there's no benefit
for us at all. We just get sick. Nickel industry

(22:19):
managers say they're mitigating and compensating for their social and
environmental impacts. IMP said it shares electricity with the community
and monitors air pollution to ensure compliance with Indonesian rules.
In twenty twenty three, all air quality tests met the standards.
The complex funds local schools and buys ambulances for nearby villages.

(22:41):
It's also installing solar panels, though they'll provide only a
fraction of the electricity needed for nickel smelting. Indeed, IMP
isn't done building coal plants. Plans call for it to
ultimately operate perhaps six thousand megawatts of coal power, enough
to meet the electricity demand of about five million US homes.

(23:02):
To Hamid Mina, IMP's managing director. This choice of energy
source and everything else comes down to the cost to
the ultimate end users, car makers and their customers. Now
everyone is concerned about the environment, Mina said in an
interview in Singapore. Okay, I use solar panels. Are you
willing to buy a car with two times the price?

(23:25):
Mina said he resented being lectured by citizens of rich
countries that had engaged in their own environmental dispoliation Europe,
United States, Canada. You already cut everything down, he said.
Now you're blaming us. Over time, Mina explained IMP would
use its cost advantage to move up the ev value chain,

(23:47):
taking over processing that now occurs in China and on
a site that he said could still substantially expand in size.
He argued that it could do so while reducing its
environmental impact thanks to future improvements such as better pollution
filtering in coal plants, and that much of the responsibility
for conditions beyond its walls lies with the government, to
which we pay a lot of tax. Mina also asked

(24:10):
critics to consider the trade offs. Before IMP came to Morowali,
there were trees, forests, nothing, but sometimes they ate only
once a day. Today. We have industry dust smoke, but
I give them jobs. We'll be right back after a
brief break. We now returned to the dirty, deadly forges

(24:35):
of Sulawesi. Even before the fire on Christmas Eve, fatal
accidents were common in Indonesian nickel facilities. Trend Asia, a
non governmental organization based in Jakarta, compiles statistics on such
deaths based on media reports. From twenty fifteen to twenty
twenty two. It logged fifty three fatalities in the first

(24:57):
eleven months of twenty twenty three, recorded seventeen. These figures
aren't necessarily comprehensive, since not all accidents make the news.
In interviews with BusinessWeek, more than a dozen current and
former i MIIP workers expressed worry about safety conditions or
said they had personally witnessed or been affected by workplace accidents,

(25:19):
while some said that managers had attempted to improve their conditions.
The workers described an environment rife with danger from construction sites,
where a moment of inattention can be fatal to growling
temperamental smelters capable of immolating their attendance if mishandled among
huge sometimes ill maintained machines and chemical processes conducted at

(25:40):
incinerating temperatures, disaster is always possible. One employee described an
incident in which a machine operator fell into a pool
of molten slag, killing him instantly. Another was familiar with
accidents in which workers hands had been crushed by machinery.
Another an occasion when a worker was fatally rung over

(26:00):
by a forklift, and yet another instance a young employee
was struck and killed by a falling piece of metal.
Virtually all the workers confirmed the contents of a standard
policy imposed by IMIP and its tenant companies. When a
serious accident occurs, employees are told not to discuss it
publicly or share photos on social media, with penalties that

(26:22):
can include termination. Imp said employees can send, forward and
share any information. The families bereaved by accidents in nickel
facilities aren't just in Indonesia. A substantial number of workers
killed over the years have been Chinese, including some of
the December victims. Last year, a group of Chinese men

(26:42):
who said they'd been employed at IMIP filed a formal
complaint with Indonesian authorities, alleging they'd been forced to work
excessive hours without protective equipment while they face the same dangers.
Relations between Chinese and Indonesian staff can be tense, and
some IMIP workers attribute safety failures partly to a culture clash.

(27:03):
Chinese managers sometimes break the Indonesian safety rules, says Hasri Sana,
an official with FPE, a union representing IMIP staff. There
are a lot of injuries and more injuries without data
that are not recorded. Other issues are more practical. Until recently,
according to Arnold ferdaus Bandu, the head of the government

(27:25):
Manpower office for the province that includes Morowali, some equipment
manuals were in Mandarin with no translations available. IMIP said
it investigates employee complaints and records all injuries. Meanwhile, it
said all documents must be bilingual in Chinese and Indonesian. Agus.
A safety manager at a Chingshan controlled company within IMIP

(27:48):
described a dispute with his Chinese superiors over the operation
of dump trucks, which are used in huge numbers to
move coal and nickelore around the complex. The trucks sometimes
developed leaks in their air pace break systems, risking a
malfunction if the vehicles weren't repaired. Augus said that when
he objected because of the pressure of production, they would

(28:08):
say keep using it. Another employee, a dump truck operator,
said workers are sometimes instructed to drive vehicles with broken suspensions.
Agus had also worked on a conveyor belt that moves
coal toward a power plant. There, he said, workers each
received fifteen respirator masks per month, but in an environment
thick with coal dust, each mask would become saturated after

(28:31):
four or five hours. By the end of a shift,
Agus said workers would often find coal residue around their mouths,
suggesting they'd been inhaling it. Other risks are more acute,
Agus sent a worker A Reef from another I Miip
based company, said they're sometimes told to perform cleaning and
maintenance around conveyors while the belts are still running to

(28:53):
avoid slowing production by shutting them down. It's only a
few centimeters from the conveyor, a Reef said, which could
result in a serious accident if, for example, clothes get
caught in the machinery. The risks are compounded by a
consuming pressure to move fast. Welding or any other repair
should not be done in a hurry. Areef said, everything

(29:15):
about safety should be improved. In its statement, I MIP
s had faulty or abnormal equipment, including vehicles, is strictly
prohibited from participating in production, and workers must be provided
with protective equipment that meets the requirements of laws and standards. Moreover,
it is strictly prohibited to perform surrounding, cleaning or maintenance

(29:36):
tasks when the conveyor belt is running. Despite the danger,
many workers told Business Week they were grateful for their jobs,
but even some of those who said they were generally
happy at I MIP shared harrowing stories. Henry, a mechanic
in a smelter, said that a few years earlier, he
was working around a piece of equipment called a mud gun,

(29:56):
which is used to close the outflow hole of the furnace.
Unaware that Henry was there, a colleague activated the hydraulics
without warning. The machine slammed into Henry's chest, pinning him
for a month. He struggled to sleep because of the pain.
In twenty twenty two, according to a person with direct
knowledge of the matter, Tesla's battery supply chain team brought

(30:18):
a report to Chief executive Officer Elon Musk on making
a major investment in nickel production in Indonesia, but Musk
turned them down. The person says he'd always resisted joint ventures,
which would be the only practical strategy. Despite Musk's refusal,
Tesla uses large volumes of nickel from Indonesia for its
higher end models. Some of its entry level cars use

(30:41):
LFP batteries. In twenty twenty two, TESLA entered long term
supply contracts for battery materials with two Chinese companies, jejiog
wai Yo Cobalt and CNNGR Advanced Material. In its most
recent sustainability report, TESLA identified both companies as nickel suppliers,
with China and Indonesia listed as source countries. A substantial

(31:04):
proportion of that material is likely coming from IMIP or
will Soon Huayo is the majority owner of an Indonesian
entity called p T. Huayue Nickel Cobalt, which operates a
major smelter in the facility filing show it accounts for
at least twenty three percent of huah Yo's current operating
capacity in Indonesia. CNNGR is the lead investor in another

(31:27):
I MIIP smelter, pt xiong Qing New Energy, which represents
about thirty one percent of cnngr's planned nickel capacity in
the country. Qing Shan Imip's parent company has financial connections
to both. A Singapore entity it controls is an investor
in pt xiong Qing, while an Australian company with which

(31:48):
it's affiliated has a stake in pt Hua Yua. In
its sustainability report, TESLA said it has invested significant resources
to address environmental and safety risks in Indonesia and that
the transition to EVS will not be possible by only
relying on non Indonesian nickel. Other EV manufacturers have similar
connections to Morowali through intermediaries. Huayo lists LG KEM as

(32:13):
a key customer in filings, and the two companies have
an extensive relationship, including plans for a shared nickel smelting
operation in Indonesia. Recently, Lgkem announced a roughly nineteen billion
dollar supply contract with General Motors. A subsidiary, LG Energy
Solution is developing a joint battery plan with Hyundai Motor

(32:34):
and has deals to supply batteries to carmakers such as Toyota.
Another example begins with an IMIP smelter called pt QMB
New Energy Materials, which is controlled by China's GEM. The
Korean company eco Pro is an investor in PTQMB, and
GEM identifies it in filings as a major customer. It

(32:55):
or its affiliates supply materials to Samsung, SDI and sk Innovation.
The former has made batteries for cars such as the
BMWi seven and is building a US battery manufacturing complex
with Stlantis. The latter has supplied batteries for Ford's F
one fifty. Ecopro declined to comment. A unit of China's

(33:16):
contemporary Amperex Technology, whose batteries are in vehicles from Mercedes,
Benz and Volkswagen, among others, also has a stake in PTQMB,
though the spokesperson said no caatl batteries include nickel from IMIP.
GEM didn't respond to a request for comment. In separate statements,
WAYO and CNGR said they raised safety standards after the

(33:39):
December twenty fourth explosion and view preventing workplace accidents as
an overriding priority. Both companies also said they comply with
relevant environmental standards even if car makers wanted to, it
would be challenging to ensure their vehicles don't contain nickel
from IMIP or any other specific mine or smelting complex.

(34:00):
Once it reaches processing plants in China, it can mingle
with material from many sources, and for the moment, there
aren't obvious alternatives to exclude Indonesia from the supply chain.
It would be near impossible to meet ev roll out targets,
says Jack Anderson, a research director at Project Blue. Simple
as that Indonesia's next president will be Praboo Subianto, who

(34:25):
won a decisive election victory in February. A former military
commander and veteran of some of the country's bloodiest internal conflicts,
he was for a time effectively banned from the US
because of alleged involvement in human rights abuses, which he's denied.
Praboo is a controversial figure, he nonetheless represents a degree
of continuity, not least because Jocoe's son will serve as

(34:48):
his vice president. Jokoy himself was term limited on the
campaign trail. Praboo indorsed down streaming, as Jocoe calls his
policy of expanding nickel production. The arguments of staying the
course are strong. The Median age of the population is
around thirty and there is an urgent need for jobs.
At the same time, tax revenue generated by the industry

(35:10):
provides a resource for political patronage in a country with
a rich tradition of graft. In Transparency International's most recent
Corruption Perceptions Index, Indonesia ranked one hundred and fifteenth, behind
Belarus and Kazakhstan. Some nickel industry figures have suggested that
eventually car makers may insist on higher safety and environmental standards.

(35:33):
That could mean playing a direct role in mining and refining,
which would also provide more control over the supply of
a critical industrial input. Ford, for example, has partnered with
Wayo and Valet to develop an HBAL project in Sulawesi.
In a press release, a Ford executive said the plan
would better protect people and the planet, and companies have

(35:54):
long sought to develop technology to help end users know
the origins of their raw materials, although some tracing efforts
have struggled either way. So called green nickel will come
at a premium to current prices, which manufacturers may not
be willing to pay or pass on to their customers,
and in even the most aggressive scenario, the introduction of

(36:15):
such a separate supply chain is years away. For now,
most carmakers will continue to get their nickel from the cheapest,
most abundant sources available, with the costs borne by the
mainly poor Indonesian and Chinese workers who operate mines and smelters.
In late December twenty twenty two, words circulated on social
media of a fatal explosion at PT Gunbuster Nickel Industry,

(36:39):
one of the main operators in a smelting complex about
four hours drive from Imip. Two workers had been in
the cab of a crane when coal dust caught fire
below trapped. They burned to death. In another part of Sulawesi,
Nelo nov Barnearti, twenty eight, saw the news and was alarmed.
Her twenty year old brother, e made de free Hari Jonathan,

(37:02):
had been working as a trainee at Gunbuster. Jonathan had
told barney Arti he was enjoying the work. He'd talked
about using his earnings to expand the family's small rice farm.
Then a cousin called to tell her Jonathan was one
of the dead, along with a young female colleague. Near
juan Ocella, who developed a following on TikTok for her

(37:23):
cheerful videos about life at a nickel smelter. Gunbuster arranged
to drive Jonathan's body to the farm. He was laid
to rest on December twenty sixth, the birthday of his mother,
Ni Ketutsunarti. Jonathan always gave me a cake for my birthday. Instead,
we had his funeral, she said in an interview. In

(37:45):
the family's home, The concrete floored house was decorated with
photos of her son posing for a portrait in a
shirt and tie, playing the keyboard at a church service.
Gunbuster provided some compensation, but the family hadn't spent it.
The money is like Jonathan's body, said his father, eketut Bartolomias.

(38:06):
How could we use it. They felt the same way
about selling Jonathan's motorcycle, which sat in the garage unused.
The complex that hosts Gunbuster, set up by China's Jungsu
de Long nickel industry, is devoted primarily to producing lower
grade nickel for stainless steel, but it's becoming part of
the ev supply chain. Tesla supplier CNNGR has inaugurated a

(38:30):
facility there to produce nickel matt, which can then be
processed into material for batteries. Filings indicate that its capacity
for such products will be greater than c inngr's operation
at imip It's entering a site with a dismal safety record.
After the accident that killed Jonathan and Cele, workers at
Gunbuster staged protests over conditions. These soon turned violent, and

(38:55):
two people were killed in the ensuing melee. Indonesia's National
Human Rights agency komnas HAM investigated the clashes and the
events that preceded them. In a report, the watchdog wrote
that unsafe working conditions, lack of protection for workers health
and welfare, and disregard for corporate responsibilities make this situation

(39:15):
extremely serious and unacceptable. In a cafe nearby, Gunbuster, workers
told business Week that they feared for their safety. Periodically
the power went out, pitching the cafe into darkness for
the few seconds it took for patrons to switch on
their phone flashlights. Agung, a mechanic, explained that he wasn't
provided with protective goggles. If he wanted them, he would

(39:38):
have to buy them for as much as one million
rupea out of his monthly salary of just three point
seven million rupeia. His large eyes were red and watery,
the result, he said, of welding without eye protection. Some
months earlier, a colleague had lost an eye when a
splash of hot metal hid his face. Gunbuster said in
a statement that employee welfare is our ut most concern

(40:01):
and that it complies with safety rules and is seeking
to improve conditions. However, work accidents are a risk that
can occur in various industries and work situations without exception.
C NGR set its committed to continuous improvement of safety
in its new project, as at Imip. Workers at Gunbuster

(40:21):
are told not to share information after accidents, but such
mandates can't match the speed of the Internet, and photos
circulate in employee WhatsApp groups. Agung shared an image dated
June twenty sixth, the day of a deadly smelter explosion
at Gunbuster, that Indonesian media reported on. It showed two
shirtless workers receiving medical attention. One slumped on a plastic chair,

(40:45):
had frayed bandages on both arms and his face. The
other was sitting upright with strips of bandages across his eyes, nose,
and cheeks, as well as on his left hand. Chinese
staff working in an unfamiliar country can be vulnerable in
defferent ways. Joe, a worker in his late fifties, came
to Gunbuster in twenty twenty one from Hunan Province to

(41:07):
work in construction. Soon after he arrived, he said he
was struck by a rock falling from an excavator. Gunbuster
said it had no comment on Joe's account. Bleeding, he
took the day off work and later learned that his
pay had been docked. Joe said that after he complained,
three men woke him and began beating him until he
passed out. He eventually went to a hospital. A medical

(41:30):
report he shared with BusinessWeek indicated that he was diagnosed
with a suspected skull fracture, but Joe said that his
superiors refused to let him stay for treatment. He eventually
made it back to China, where he sent a letter
to local officials describing his experience. He said he never
received a response. The nickel processed at Gunbuster and by

(41:52):
c NGR at the same site his mind from high
above the smelter complex, accessible by hauling roads that wind
up the hillsideids the extraction of lateritic nickel, the type
that's available in Suloece looks nothing like what most people
picture when they think of a mine. The ore lies
just below the surface, so there's no need for a

(42:12):
deep pit let alone a tunnel descending to underground deposits. Instead,
crews clear cut broad areas of forest and remove the
top layers of earth, exposing nickel containing material that can
then be carried out. New concessions are appearing up and
down the coast of Sulaeesi as the smelters expand, leaving
jagged gaps in the tree cover. Mining companies are supposed

(42:36):
to restore the forest when they're done, but environmental groups
are skeptical that this will ever make up for the losses.
On a recent morning, at a mine site near Gunbuster,
an orange excavator chewed away at a mound of dirt
as a dump truck waited nearby. The sun was punishing,
and a pair of workers on a brake sat under
a crude shelter erected from sticks and a tarp. Just

(42:58):
down the slope, it was possible to make out the
smelters in the hazy distance, accessible by an unpaved hauling road.
Columns of trucks flowed toward it and away, throwing up
clouds of dust beyond. On the Banda Sea, the nickelships
were waiting for their cargo with Mohammed Jafarbua, Alfred Song,

(43:19):
regif Asri, Ibrahim Ako Listiorini and David Stringer.