Rocks unearthed here contain traces of nickel, a key ingredient in electric vehicle batteries. Extracting it, refining it and readying it for export is a gargantuan task.
More than $1 billion has been sunk into the processing facility, the first in Indonesia to use an acid-leaching technology to convert low-grade laterite nickel ore — which the country has in abundance — into a higher-grade material suitable for batteries. Foreign investors and lenders cite the project as evidence of their commitment to fighting climate change.
But the sprawling facility, bordered on one side by forest and on the other by blue seas, faces a major challenge: what to do with the roughly 4 million metric tons of toxic waste produced every year — enough, approximately, to fill 1,667 Olympic-size swimming pools.
In 2020, the companies behind the project told the government they had a solution: They would pump the waste into the ocean. They ultimately backtracked in the face of public pressure. But it’s not clear that the on-land storage alternative they’ve offered instead is significantly safer.
And as global demand for nickel surges, company executives and Indonesian government leaders are turning to a refining technology long considered too risky to embrace, too perilous for the environment and for local communities.
Indonesian officials say this new refining technology is needed to harness these nickel resources, which they hope will transform the country’s future as oil did for Saudi Arabia. At least 10 other projects using this same technology are already under development, according to the Indonesian Nickel Mining Association.
Officials have made it a priority to build a nickel supply chain, banning the export of raw nickel ore for processing abroad and approving the development of acid-based refining facilities as well as additional conventional nickel smelters at a rate unparalleled elsewhere. Despite official pledges to reduce carbon emissions, the government has approved the construction of coal-fired power plants specifically to support the processing of nickel for the EV industry.
Laterite nickel ore comes in two forms, and until recently there was no need to use the acid-leaching technology in part because Indonesia was mining the kind known as saprolite, which can be processed partly by using traditional smelters. But Indonesia — and the world — is running out of saprolite ore. What will be left is lower-grade limonite ore, which consists of less than 1.5 percent nickel, making processing by traditional means nearly impossible.
One afternoon late last year, Liyus, a 52-year-old farmer on Obira, walked along the coast where his family has lived for four generations. It’s been quiet on this island for most of his life. Without a private jet, getting to Obira from the Indonesian capital, Jakarta, is at least a two-day journey involving an overnight ferry and hours of driving on roads stippled with potholes.
Liyus, who goes by one name, said he used to drink from the rivers that run past his village, but since the nickel mine added its acid-leaching refinery two years ago, the waterways have turned dark red, so thick with pollution at some points that rows of coconut trees have been killed off. He doesn’t know what’s in the water, only that it bleeds into the sea and that his nephews have had to go farther and farther out to find fish. He pointed to a fishing net drying on a nearby tree. It was stained a reddish brown.
In an hour-long interview, representatives from the two companies that jointly own the processing plant on Obira island — an Indonesian firm, Harita Group, and a Chinese firm, Lygend Resources — said that the operation has not had a negative impact on the environment and that the pollution along the coast was not related to waste produced by their plant. All of their operations, they emphasized, are in “full compliance” with government requirements. “We looked at what was the best and we confirmed it with the government,” said Tonny Gultom, Harita’s head of health, safety and environment.
Like other inhabitants of the village of Kawasi, which sits at the foot of Obira’s nickel-mining operation, Liyus has never owned a car and has no idea why there’s been a sudden interest in the mineral that sat untouched on his island for so long.
“We had a comfortable life,” Liyus said, “before this.”
High-Pressure Acid Leaching (HPAL) is a method of refining low-grade nickel ore by combining it with sulfuric acid under high pressure and heat, producing a slurry that allows for the extraction of pure, high-grade nickel. The technique was pioneered in the 1960s in Cuba but has rarely been used elsewhere — until recently.
Managing the acidic material under extreme heat is more complicated than traditional methods of refining nickel ore. And the titanium vessels needed to mix the chemicals are expensive, part of why capital costs for HPAL projects are typically double those of conventional smelters, according to the International Energy Agency, an intergovernmental research organization.
The leaching process is also energy-intensive, and generating that energy produces about 20 tons of carbon dioxide per ton of nickel, or about double the amount of the prevailing processing method, according to the IEA.
And then there’s the waste.
Engineers have suggested three disposal options: putting the waste into a ditch behind a dam; drying out the waste and stacking it on vacant lots; and pumping it into the ocean. Each approach can go wrong.
Some of the world’s biggest mining companies have tried to master the HPAL process — and failed.
Arif Amin stands in a sacred spot in Sagea Lake. The water has long supported life on Halmahera island, but it also has spiritual significance for villagers. The stilt house on Sagea Lake where Arif Amin lives part time. Locals worry about pollution from a nearby refinery, and already when it rains, the lake turns a muddy red, he says.
In 2021, Brazilian mining conglomerate Vale exited a multibillion-dollar HPAL nickel-mining project in the Pacific archipelago of New Caledonia after having five chemical spills in 10 years. Studies by scientists in New Caledonia had by that time found “high levels” of toxic hexavalent chromium in water samples collected in and around the HPAL refining facility. The facility, now owned by a consortium of New Caledonia companies, had yet another leak in November at its tailings dam, prompting local authorities to impose new regulations that could limit production.
Closer to Indonesia, in Papua New Guinea, a Chinese company operating an HPAL plant has for years been criticized by residents and officials for dumping its tailings into the sea. After a tank filled with mining waste overflowed onto the coast in 2019, thousands of residents filed a lawsuit against the company demanding $5.2 billion in damages. The case is still pending in court, said lawyer Ben Lomai, who represents the plaintiffs.
HPAL’s troubled history, however, has done little to deter industry enthusiasm for the technology.
While research is being conducted on safer ways to process limonite nickel ore, they won’t be able to satiate existing demand, said Brian Menell, founder of TechMet, an investment firm that focuses on minerals required for the green-energy transition and does not operate in Indonesia. Indonesia’s HPAL facilities “might not be how you want your nickel,” he said, “but right now, you’ve got no choice.”
A change of plans
After the companies withdrew their initial plan to dump the HPAL waste into the sea, they told authorities that they would store the waste on land, drying out the acidic slurry before dumping it back into the mining pit, and then treating the residue water in a tailings “pond.”
Asked about those findings, a Harita spokesman acknowledged that storing the waste on land is dangerous but said the company is managing the risks by drying out the slurry and dumping it back into the mining pit, where it is prevented from seeping into local waterways.
But a foreign mining consultant who has been working on projects in Indonesia for more than two decades said: “It’s a massive heap of waste. And if it’s not stored properly, you can have landslides. That’s my biggest concern.” He spoke on the condition of anonymity because of business considerations.
Following the public outcry over the initial disposal plan, the Indonesian government barred all nickel-processing plants from dumping waste into the sea, said Luhut Binsar Pandjaitan, Indonesia’s coordinating minister for investment and maritime affairs and chief architect of the country’s nickel strategy.
“We tackled this very well, you know?” Luhut said, speaking at his office in Jakarta last year. “We listened to the advice of the European Union and we stopped. We don’t do that anymore.”
Luhut Binsar Pandjaitan, Indonesia’s coordinating minister for investment and maritime affairs and the chief architect of the country’s nickel strategy. Trucks transport raw nickel ore to a refining facility at the Weda Bay Industrial Park.
Four international mining experts independently reviewed photos of the mining site at Obira taken by The Washington Post. The experts said that it was impossible without a formal audit to ascertain whether Harita and Lygend were dumping HPAL tailings into the sea, but that there were multiple signs that the companies were generally failing to contain mining waste.
The photos show “devastating” levels of deforestation, which can increase the risks of tailings accidents, said Aimee Boulanger, executive director of the Initiative for Responsible Mining Assurance, an organization that audits mining operations and measures them against social and environmental standards. Even if tailings were not being actively pumped into the sea, there don’t appear to be “any significant controls” over what’s flowing out of the mine and entering waterways, she added.
“Frankly, I feel a bit ashamed to be part of an industry that’s allowing this to happen,” Riggall said. “If this is the legacy we leave behind … who will be happy with that?”
Gultom, Harita’s head of safety, acknowledged that the HPAL refinery was producing a “huge volume” of waste that could pose safety risks if not properly managed, but he stressed that it was being handled with adequate precautions.
The discolored water near Obira’s coast, he said, was caused by sedimentation created by timber mining years ago. “It has nothing,” Gultom said, “to do with us.”
Harita, which debuted on the Jakarta stock exchange in April, plans to add a second processing plant on Obira next year, company executives said.
A booming industry
Across the nickel-rich islands of North Maluku province, old mining companies are expanding and new ones are taking root. They’re taking over large tracts of land, residents say, sometimes with government authorization, sometimes without. Bulk carrier ships congregate along coastlines, recalling for some communities Indonesia’s colonial history, when Dutch and Portuguese settlers exploited these islands for spices such as nutmeg and cloves.
Nickel production in Indonesia hit a record high of 1 million metric tons in 2021, though it pales in comparison with what is projected to come. By 2028, according to Macquarie, the country will be producing at least 2.5 million metric tons of nickel annually.
China’s CATL and South Korea’s LG, the world’s largest battery manufacturers for EVs, recently announced they would open HPAL plants in Indonesia. Ford Motor Co. said it would join an HPAL project being developed by Vale and Chinese mining company Huayou on Sulawesi island in eastern Indonesia. And last year, Tesla signed a $5 billion deal to buy nickel from Indonesia, government officials said.
Maryama Usama, a farmer who lives in Sagea, a village just outside the Weda Bay Industrial Park. The nickel smelters of the Weda Bay Industrial Park are seen in the distance.
One of Indonesia’s biggest upcoming HPAL projects is not far from Obira in North Maluku.
Maryama Usama, 60, lives in Sagea, a village just outside the industrial park. She has heard that the nickel companies on Halmahera need more space. And she said she knows people in the neighboring village of Gemaf who weren’t given any notice before heavy equipment showed up on the land that had belonged to their families for generations.
“The government may have given them permits,” Usama said, brushing the corner of her eye with her hijab. “But the land does not belong to them. It’s ours.”
A matter of trust
But Faizal Ratuela, executive director of the North Maluku chapter of WALHI, an Indonesian environmental advocacy group, questioned whether these companies can be trusted to responsibly operate nickel refineries, especially those that use technology as complex as HPAL. He pointed to their environmental records in Indonesia and China.
Since the Harita Group ventured into mining in the early 2000s, it has clashed with local communities several times, including on Obira, where journalists who tried to report on the effects of the mine have been detained and intimidated by security personnel employed by Harita, Ratuela said.
Sian Choo Lim, head of sustainability at Harita, said that there may be an “image” that the company has not done enough to protect the environment, but that it’s unfounded. “We’ve never had any issues with the Kawasi community,” she said.
Faizal Ratuela, executive director of the North Maluku chapter of WALHI, an Indonesian environmental advocacy group. Mount Gamalama, an active volcano that forms Ternate island, just west of Halmahera island in North Maluku province.
Zhang Baodong, a Lygend representative, declined to address these violations. “What we’ve done [at Obira] is already very up to mark,” he said. “I have nothing more to add.”
Indonesian companies are aware that HPAL is a “totally different” technology from what they’re familiar with and that the waste management is particularly tricky, said Meidy Katrin Lengkey, head of the Indonesian Nickel Mining Association. “But as companies, we say, as long as there is a regulation, we’ll make sure to follow.”
Environmental regulations in Indonesia have long been difficult to enforce because they’re often delegated to faraway provincial governments, which are not only strapped for funds but prone to corruption, activists say. Now, they say, even those regulations are being rolled back in some cases to attract foreign investment.
Villagers, as a result, fear they are defenseless.
Arnikus Jinimaya says he lost his land to the Weda Bay Industrial Park. Nickel mining has stripped bare a hillside in Gemaf. Arnikus Jinimaya and his brothers used to farm the land that was on this hillside.
“The government is supposed to protect us,” said Arnikus Jinimaya, 66, a Halmahera resident who said he lost his land to the Weda Bay Industrial Park. “But now, we see they only protect those who have money.”
Luhut, the senior minister, scoffed at the idea that officials were overlooking social or environmental safeguards. There are problems “here and there” with the nickel-refining industry, he said, but the government is more than able to take care of the country’s resources without “the lecturing” of environmental activists — especially those from carbon-emitting Western countries.
The tall, mustachioed former general has spent the past few years engineering the growth of the nickel industry, personally inaugurating new HPAL facilities and courting figures such as Tesla chief executive Elon Musk. At cabinet meetings and international summits, he has repeatedly made the case that the global energy transition presents the biggest economic opportunity for Indonesia since it gained independence in 1945.
“This,” Luhut said, leaning over his desk to point at a graph charting nickel growth, “is going to transform Indonesia.”
In June 2021, a few months after the refinery on Obira began operating, Luhut visited the island, donning a red hard hat as he examined the new HPAL technology. Liyus and other residents of Kawasi said they had expected him to stop at their village, where they hoped to show him the rivers that had started to run red and the trees that had died when their roots were covered by sludge from the mine.
He never came, locals said.