Sufferings of Residents and Environment behind the Business Transactions of Tesla and Chinese Companies in Indonesia

Jakarta/Morowali/Weda/East Luwu, 9 August 2022


The move by an electric car manufacturer from the United States (US), Tesla Inc, to sign a nickel purchase contract worth around US$ 5 billion from two Chinese companies in Indonesia, is against the rules and/or the agreement it made itself, which is to strictly implement Environment, Social and Governance (ESG) aspect in investing.

Tesla’s claim at the annual shareholders’ meeting in September 2020 that it will implement business practices that do not pollute the environment while keep paying attention to social aspects, is just an empty message.

As claimed by the Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan, that the electric vehicle company from the United States, Tesla, has signed nickel purchase contracts from two Chinese companies in Indonesia, namely Zhejiang Huayou and CNGR Advanced Materials.

Zhejiang Huayou is a company engaged in the research, development and manufacture of new energy lithium battery materials and cobalt new materials products, headquartered in Tongxiang Economic Development Zone, Zhejiang, China. Meanwhile, CNGR Advanced Material is a subsidiary of Hunan CNGR Holding Group Co., Ltd, that focuses on professional and comprehensive service provider of advanced energy materials for lithium batteries and is based in West China, Dalong Economic Development Zone, Guizhou.

Zhejiang Huayou itself has signed Framework Cooperation Agreement with PT Vale Indonesia to develop a High-Pressure Acid Leaching (HPAL) processing project in Pomalaa, Kolaka, South-east Sulawesi on Wednesday (27/4/22).

On the other hand, CNGR Advanced Materials invested in two nickel matte projects with Rigqueza last year in Sulawesi, with a total annual capacity of 60,000 tons. The company also reached an agreement with nickel giant Tsingshan Holding Group, that will supply 40,000 tons of product.

CNGR Advanced Materials has also signed an agreement with Singapore-based Riqueza International Pte Ltd  jointly invest in three projects in the Weda Bay industrial area to produce nickel matte in North Maluku. In addition, the company will invest three new projects in Indonesia to produce nickel matte, aiming to increase annual capacity by 120,000 tons to meet increasing demand for products used in the manufacture of electric car batteries.

Residents’ Suffering and the Environment

Behind the business transaction between Tesla and Zhejiang Huayou and CNGR Advanced Materials, there is a prolonged suffering of the people and environmental damages. CNGR Advanced Materials, which join a business agreement with nickel giant Tsingshan Holding Group, indirectly contributed to the destruction of the living spaces of residents in Morowali, Central Sulawesi and Weda, Central Halmahera, North Maluku.

Tsingshan Group (China) and Bintang Delapan Group (Indonesia) are the founders of PT Indonesia Morowali Industrial Park (IMIP). The activities of PT Bintang Delapan have triggered flash floods, caused two people to die, and hundreds of houses and government buildings, as well as public facilities were badly damaged in three villages namely Dampala Village, Le Le Village, and Siumbatu Village, Morowali on June 8, 2019.

Location of PT IMIP Industrial Estate in Bahodopi, Morowali, Central Sulawesi (Photo/JATAM)

PT IMIP’s activities also triggered sea water pollution in the Kurisa Village area, Bahodopi. The sea water suddenly turned black in June 2021. Residents suspected that the massive coal pile was dragged into the hot water disposal of PT IMIP’s 65×2 megawatt steam power plant (PLTU) when it rained heavily and flowed directly into the sea.

The fishermen, who make up the profession of the majority of the residents of Kurisa Village, are the most affected parties. Their catches amount fell. In the last three years, fish in ponds often die because the sea water temperature frequently turns hot due to exhaust from the cooling system of the coal-fired power plant turbine.

To support its operations, PT IMIP relies on coal-fired power plants for its electricity needs. To date, three PLTUs have been built with a total capacity of 1,180 megawatts out of a total of ten PLTUs to be built and used by PT IMIP. As a result, residents in Fatufia Village – where the PLTU PT IMIP is situated – were exposed to dust from the coal stockpile in the form of fine black grains which were scattered to people’s homes.

Another threat is related to the government’s plan to allow the disposal of tailings waste into the Morowali deep sea through the Deep Sea Tailings Placement project, adversely affecting more than 7,000 fishing families. Moreover, Morowali waters are included in the coral triangle, namely waters in the western Pacific Ocean, including Indonesia, which contains a very high diversity of species (nearly 600 species of coral reefs) and supports the surrounding marine life. There are at least 3,000 ha of coral reefs under the Morowali Sea, especially ±710 ha in Bahodopi District.

Meanwhile, business transactions between Zhejiang Huayou and Vale Indonesia also put the safety of residents in East Luwu, South Sulawesi and Pomalaa, South-East Sulawesi at risk. The existence of PT Vale Indonesia has caused losses to the community in Malili, East Luwu.

In 2014, an oil spill from PT Vale Indonesia polluted the Lampia Sea. Then, in 2018, Lake Mahalona was also heavily polluted due to sedimentation of ex-mining soil. In August 2021, PT Vale’s operations also polluted the waters of Mori Island, resulting in disruption of aquatic biota, health and livelihoods of residents.

In 2016, PT Vale was suspected of taking agricultural land and the land of the indigenous people of Sorowako, Nuha District, East Luwu. In addition, PT Vale criminalized seven activists and indigenous people around the mine in March 2022. The criminalization of these residents began when the indigenous people around the mine held a demonstration demanding PT Vale’s accountability for the company’s mining on indigenous peoples’ land.

Lokasi Tambang Vale Indonesia di Luwu Timur, Sulawesi Selatan (Foto/Walhi Sulsel)

Meanwhile in Weda, the investment of Tsingshan Holding Group and Huayou in PT Indonesia Weda Bay Industrial Park (IWIP), has triggered massive land grabbing and environmental destruction. PT IWIP is suspected of having confiscated the land of Lelilef Sawai residents, which is a community garden planted with nutmeg, cloves, coconut and lanzones. The activities of PT IWIP have also polluted four rivers which are the main water sources for residents, namely Ake Wosia, Ake Sake, Seslewe Sini and Kobe. PT IWIP’s mining activities in the forest area are also the cause of severe flooding that keeps recurring every year. The worst incident occurred on September 8, 2021, when heavy flooding submerged the houses of residents in Lelilef Woybulen and Trans Kobe in Central Weda District.

Not only polluting rivers, coastal and marine areas in the Weda area were also destroyed due to PT IWIP’s activities. The dam that holds PT IWIP’s B3 waste in Lelilef Village, Weda Tengah District, collapsed and allegedly spilled into the sea on January 30, 2022. In addition, the Lolaro Sea, near the PT IWIP area, one of the fishing catch areas, since the operation of PT IWIP, the fisherwomen are experiencing difficulties due to the decreasing number of fish because the mining waste from land clearing has made the sea polluted, black and brown in color.

Lokasi Kawasan Industri PT IWIP di Weda, Halmahera Tengah, Maluku Utara (Foto: Adlun/JATAM)

It did not stop there, two nickel mining companies suspected of being affiliated with PT IWIP, namely PT Zhong Hai Rare Metal Mining and PT First Pacific Mining Indonesia, which operate in Sagea Village, North Weda, threaten the existence of the karst landscape in the Weda area, including the Bokimaruru Karst Cave site. This karst area is the most important water source for the people in the surrounding villages.

Thus, the excuse of the companies and governments in continuing to promote electric cars as a crucial to the ‘global’ competition against climate change – which is supported by many NGOs and activist groups, especially in the Global North- ignores the negative impacts of mineral and ore extraction required to produce such a car, and is simply referred to as a ‘local’ impact.

The claim that the dismantling of nickel as part of a low-carbon and environmentally friendly development has actually taken a high toll. The more demand for nickel from the global market, including for the fulfillment of electric vehicle batteries, the faster the expansion of the destruction of people’s living spaces and the environment on land and waters of Indonesia.

The practice of nickel extraction in Indonesia has triggered the loss of access for most people to food and water, as well as the escalation of conflict which is getting higher and wider due to land grabbing and repressive security approaches to people who defend their living space.


Contact Person:

  1. Melky Nahar – Coordinator of Mining Advocacy Network (JATAM) – +6281319789181
  2. Ki Bagus Hadi Kusuma – Chief Campaign of JATAM – +62 857-8198-5822
  3. Ramadhani – JATAM Central Sulawesi – +62 852-4100-9590
  4. Ratna Kahali – Coordinator of Lawyer Team of Koalisi Advokasi Masyarakat Lingkar Tambang PT Vale Indonesia – +62 813-5533-0120
  5. Adlun Fiqri – Weda Resident, Central Halmahera – +62 813- 1401 – 2618