Indonesian President Joko Widodo traveled to Washington last weekend with other Southeast Asian leaders, as his US counterpart Joe Biden seeks to woo the region against China’s growing influence.
Key points:
- Elon Musk points to partnerships between Tesla and Space X in Indonesia, which has the richest nickel reserves in the world
- Environmental groups say nickel mining has caused environmental and health risks in Indonesia
- Coal power powers nickel mining on the island of Sulawesi, the source of much of Indonesia’s nickel
But it was a trip to the small town of Boca Chica, Texas that caught the most attention back home in Indonesia.
Mr Widodo had hosted a high-level 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 hailed the tech baron as a “super genius”, Mr Musk said he was “very interested” in the future of Indonesia, a country of 270 million people.
The world’s richest man also said the country exudes “positive energy”.
“We will be looking, from a Tesla and Space X perspective, to try to build partnerships in Indonesia,” Musk said, noting “future collaboration on many fronts.”
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Indonesia, Southeast Asia’s largest economy, is seeking to capitalize on the global shift to electric vehicles (EVs) by attracting foreign investment like Mr. Musk.
Nickel is a key component of lithium-ion battery cells, which are used in most electric vehicles.
The demand for the metal is therefore increasing rapidly.
Sumitomo Metal Mining – Japan’s largest nickel smelter and a supplier of Panasonic lithium-ion batteries used in Tesla electric vehicles – said in March it expected global demand for nickel to rise 20% in the year 2022 alone.
According to research firm Wood Mackenzie, nickel consumption for electric vehicle batteries is expected to increase by 64% between 2019 and 2025.
Along with Australia, Indonesia has the largest nickel reserves in the world, according to the US Geological Survey (USGS), a US government agency.
The USGS reports that mining production in Indonesia increased by 30% in 2021, which it attributes to the “ongoing commissioning” of projects in the resource-rich archipelago.
Mr. Widodo’s visit to Space X follows a recent meeting between Mr. Musk and Prime Minister Luhut Binsar Pandjaitan, and Indonesian officials told Reuters that working-level discussions on investment in the industry nickel had already taken place.
Indonesian Investment Minister Bahlil Lahadalia said Mr Musk would be a “loser” if he did not invest in the country.
Musk ‘fiery’ about Indonesia
“I think it’s great that Indonesia has a large population and the population is growing,” Musk said when meeting Widodo in Texas.
“That’s very good. Because, for example, we need a lot of people for the future – and also Mars. Mars has no one, so we need people for Mars,” he said. He’s joking.
“Indonesia seems very upbeat and positive about the future, which is great,” Musk added.
But not everyone is so excited about the prospect of new investment in nickel mining in Indonesia, which is associated with coal-fired power plants.
A group of Indonesian environmental activists have written to Mr Musk, highlighting the billionaire’s previous statements regarding environmental sustainability.
“If Tesla wants to invest in Indonesia, they should make it free of coal-fired power plants,” Pius Ginting, coordinator of the Action for Ecology and People’s Emancipation Association (known by its Indonesian acronym AEER), said in the letter.
“Because it defeats the purpose of electric transport: to reduce total gas emissions,” he added.
In mid-2020, Mr. Musk called on mining companies to increase their nickel production to meet Tesla’s needs.
“Tesla will give you a giant contract over a long period of time if you mine nickel in an efficient and environmentally friendly way,” Musk said at the time.
Indonesia has long sought to boost the domestic processing of nickel ore and other minerals – not just the export of the raw product – in part as a way to create local jobs.
But nickel smelting in Indonesia often relies on coal power, and environmentalists say the country’s nickel industry fails to meet “environmentally sensitive” standards.
While Indonesia has pledged to end the construction of new coal-fired power plants after 2023, coal-fired power generation remains a critical energy source and accounts for more than a third of total carbon emissions. from the country.
Residents’ ‘right to breathe’ violated by nickel, activist says
Moh Taufik hopes Tesla will consider the environmental damage caused by mining companies on the island of Sulawesi, the source of much of Indonesia’s nickel.
“Nickel mining activity has violated residents’ right to breathe clean air,” Taufik, coordinator of the Mining Advocacy Network (JATAM) in Central Sulawesi province, told the ABC.
A 2019 study by the AEER found that coal-fired power plants used for nickel production in the Central Sulawesi city of Morowali had caused respiratory infections among local residents.
The AEER reports that disposal methods by nickel factories in Sulawesi pose “a serious threat to the rich marine life of Indonesian seas” and affect the livelihoods of fishermen.
“If the company wants to invest in the region, I hope it does not consider dumping hazardous waste used as raw materials for electric vehicles [into] the sea in Morowali and other areas,” Taufik said.
AEER argues that when small-scale nickel mining operations began in Morowali in the late 2000s, traditional farmers in the area were affected by flooding exacerbated by the extractive industry.
Morowali is now the site of the largest nickel-based industrial zone 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 weigh the consequences for residents if Tesla ever builds a facility in Sulawesi.
“The government needs to consider whether this move will benefit local residents or simply trigger land disputes between the company and residents,” he said.
“Tesla’s decision to come and build a power plant could drive residents away from their living or working areas, such as farms.”
“It will most likely happen and local residents will definitely lose out.”
Indonesia’s environment ministry did not respond to requests for comment. Tesla was also approached for comment.
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