Even after 33 days in the hospital, eight operations, and more than a year of recovery, La-Taha still does not have full use of his hand. Burns have left it a gnarled mess; like his scarred torso, it also itches and cramps. All this is the legacy of an explosion at a nickel smelter owned by Indonesia Tsingshan Stainless Steel, a subsidiary of the Chinese steel and nickel behemoth Tsingshan Group. The explosion on Dec. 24, 2023, killed 21 workers and wounded 38 others as they went about their day’s work in the Indonesia Morowali Industrial Park (IMIP) in the country’s Central Sulawesi province.
The company hastily announced that the families of the dead would receive 600 million rupiahs (about $37,000), and that the wounded would receive lump sums of 10 million rupiahs (about $620). La-Taha, however, claims that he received nothing. In the hospital, he lived on half pay while the costs of care ate up his savings. With few other options, he has gone back to work in the same industrial park where the union that he is part of, Serikat Buruh Industri Pertambangan (SBIPE, or the “Mining Industry Workers Union”), provides him with support.
For more than two decades, Indonesia has deindustrialized, with manufacturing as a percentage of GDP declining from 32 percent in 2002 to 18.7 percent in 2023. If it is to become a developed country, it needs more high-value-added manufacturing. Policymakers are hoping that nickel will be the source of an Indonesian industrial revolution.
In 2023, the U.S. Geological Survey estimated that Indonesia accounted for 42 percent of global nickel reserves and 51 percent of global mine production for the mineral. That supply is now paired with the growing demand for nickel as a critical mineral used for batteries and other components of Chinese industrial might. But this bet on development has come with human cots.
In just under a decade, Indonesia has gone from bit player to dominating the global nickel market. In 2023, S&P Global estimated that it was responsible for 40.2 percent of global nickel production, and experts predict that this share could rise to 75 percent this decade. By comparison, the highest share of global oil production commanded by Saudi Arabia was just 17.4 percent in 1981.
The boom has been driven by an Indonesian ban on exports of nickel ore—meaning that yields must be processed before leaving the country—and by Chinese companies that were willing to pile in to the country to set up smelters. At first, nickel was primarily used in the production of stainless steel, but recent years have also seen a rush to produce nickel usable in electric vehicle batteries. Turning ore—which is usually just 1 percent to 2 percent nickel—into material pure enough for batteries requires a tricky process known as high-pressure acid leach, which Chinese companies are almost alone in having mastered.
The Indonesian government sees this as a roaring success. In August, outgoing President Joko Widodo credited the export bans, which also apply to a list of other minerals and were gradually introduced over a decade from 2012 to 2022, with creating 200,000 jobs and boosting government revenues by $10 billion over the past eight years. The country is now looking to promote domestic production of batteries and electric vehicles (EVs).
IMIP is emblematic of both this aspiration and its costs. The industrial park is a behemoth covering 5,500 hectares (21 square miles), hosts some 50 companies, employs some 90,000 workers, operates a private airport, and can produce staggering quantities of material. For nickel pig iron, used to make stainless steel, its annual nameplate capacity is about 4.2 million metric tons.
For mixed hydroxide precipitate, a powdery green mix of nickel and cobalt use for batteries, IMIP can produce 90,000 metric tons annually—about 60 percent of Indonesia’s total production in 2023. Further expansion is already underway.
Seasoned industry professionals speak of “IMIP shock” when referring to first-timers witnessing the scale of its operations. But its scale is matched by its danger. Industrial accidents at IMIP have claimed the lives of 40 workers between 2015 and June 2024, according to research by the nongovernmental organization TrendAsia—comprising more than a third of the 114 total industry fatalities the researchers recorded.
IMIP’s size is made possible by a mixture of vast resources and Chinese industrial might. “I call it Chindonesia,” said one veteran nickel analyst, speaking on background. “All across China, they’ve stamped out dozens of big industrial parks like this one. And now they’ve stamped one out in Indonesia, too.”
Tsingshan Group is the main owner of the park, holding 49.7 percent via one subsidiary and a substantial share via another subsidiary. The rest is owned by Bintang Delapan, an Indonesian company whose leadership includes retired military men and former senior bureaucrats. Numerous Chinese companies operate within the park, including the world’s largest battery producer, CATL; Huayou Cobalt; battery recycler GEM; and China Molybdenum.
Chinese companies’ dominance has been aided their cutting-edge manufacturing expertise, both in both nickel processing and in batteries and EVs. Their breakneck speed helps, too.
“Europeans or Japanese have so many requirements and conditions,” said Meidy Lengkey, the secretary-general of the Indonesia Nickel Mining Association. “But when you discuss with China, you can strike a deal in a week.”
But speed is costly, as the toll in lives shows. Nonfatal accidents, which rarely generate headlines, are an almost daily occurrence, according to multiple sources with direct experience with the working conditions in the industrial park. Common problems include burns to the arms from smelters, fingers lost to machines, and construction workers falling from scaffolding. Compensation, if it comes, is often limited. A lost finger might bring in 2 million rupiahs—roughly $130.
The worst off are subcontracted construction workers. They are paid daily wages, and those who spoke with Foreign Policy said that they have no access to compensation in case of workplace injuries, despite falls from scaffolding being common. They are given safety harnesses to prevent this, but these are not always used. And they have to pay for other safety equipment—such as helmets, gloves, boots, and masks—out of their own pockets.
Still, even workers employed directly by the smelters are also vulnerable to what they describe as a relentless focus on maintaining production and an intolerance of anything that might reduce this.
“Production is more prioritized than safety,” said Muahamad Taufik, a mechanic who works on the IMIP site and is also a member of SBIPE. He explained that management is often slow to replace damaged parts of machinery, and even when repairs are carried out, they have to be done as quickly as possible.
Notably, local reporting suggested that the smelter explosion in December 2023 was caused by repairs to the smelter being carried out in an unsafe way in an effort to save time. On a day-to-day basis, some workers also say that they face pay cuts if they take days off due to sickness or are found to be responsible for accidents—creating a perverse incentive not to report any mistakes.
In a country with a history of prejudice against its Chinese minority, which is often stereotyped as hard-hearted and money-grubbing, resentment at conditions takes on an inescapable ethnic tinge.
Yet Chinese workers have often been victims as well. Eight of the 21 workers killed in the December 2023 incident were Chinese. While some Indonesian workers interviewed acknowledged that Chinese workers could also be victims, many also see the production-at-all-costs management style as distinctively Chinese. Language barriers and stories about Chinese workers who see a quick kick or a slap to the head as a way to get the attention of their co-workers don’t help.
The results of these ethnic tensions can be explosive. In January 2023, fatal accidents at a nickel processing plant in North Morowali, a few hours from IMIP, sparked a strike that degenerated into a race riot in which two workers—one Indonesian and one Chinese—were killed. The events convinced the Indonesian government to send in troops to help safeguard IMIP, which has been designated as a “national strategic project.”
According to local unionists, the army and police are used to putting a damper on their activities, too. Union members who spoke with Foreign Policy claim that they have faced surveillance and intimidation, and they suspect companies and government security forces of cooperating. They report that some protesters have had wages docked or been dismissed from their posts.
Meanwhile, living conditions remain poor. Wages for laborers reportedly vary between 3 million and 7 million rupiahs ($192-$448) monthly; the provincial minimum wage sits at 2,736,698 rupiahs. This leaves workers with barely enough to make ends meet by the end of the month. The cheapest accommodation—a small, rented room shared with other workers—usually costs 1 million rupiahs a month. Morowali’s relative remoteness also means the costs of basics—such as petrol, cooking gas, and food—are higher than they are in cities in Sulawesi. And when wages are hiked, local businesses respond by pushing up prices.
Poverty and pollution also cause poor health. Houses are crowded and sit in the shadows of the smokestacks of smelters and coal-fired power plants, amid pies of uncollected rubbish and pools of stagnant water. Local doctors say that the two biggest health issues are lung disease related to air pollution and typhus spread by mice that thrive in the unsanitary environment.
Locals complain about the town’s main road, at times more pothole than path. Accidents among workers hurrying to and from shifts are common. When it rains, muddy floods swamp large areas as the rain washes exposed dirt off hillsides that have been cleared by mining or for further construction.
Facing a growing wave of negative coverage, the industry is making noises about cleaning up its act. At the Indonesia Critical Minerals Conference in Jakarta in June 2024, representatives of industrial bodies as well as giants such as Tsingshan and Huayou Cobalt, which operate at IMIP and elsewhere in Indonesia, made much noise about environmental, social, and governmental-related investment as well as improving conditions.
The Indonesian government is also striving to improve its image. In an October interview with Foreign Policy, Septian Seto—who played a key role in developing the nickel industry as the deputy minister for investment and mining, and who now serves as a member of the National Economic Council—admitted that there were problems but said that the government was serious about improving things.
“I think, first, we’re taking very firm action,” he said, citing the decision to criminally prosecute three Chinese managers accused of being responsible for the December 2023 explosion.
Workers, however, are extremely skeptical about promises of improvement. None of those interviewed by Foreign Policy were aware of how the case against the managers was progressing. And they said that they had seen little seriousness about improving conditions, despite heightened media security.
Indeed, when asked about claims the companies were cleaning up their act, a worker employed in IMIP to report on accidents deployed his limited English to simply exclaim, “Bullshit.”
However, there are also reasons for cautious optimism. Reporting by Bloomberg showed that major world automakers from wealthy nations—including Tesla, Ford, General Motors, and Hyundai—likely had or soon would have Indonesian nickel in their supply chains, and IMIP would almost certainly be a source
Speaking off the record, several analysts suggested that these companies—and Chinese suppliers—had learned from past scandals surrounding conditions in Congo’s cobalt industry and were keen to avoid a repeat. Hopes about improving access to U.S. and European markets could spur improvements.
For some, unsafe industrialization—while regrettable—is just the nature of development.
“Indonesia’s seeing an industrial revolution of its own,” said one analyst who preferred not to be named, adding, “They’re trying to jump their economy to the same level as developed countries. The big question is whether they can also improve working conditions as fast.”
Perhaps they will, perhaps they won’t. Until then, though, for the workers who are still struggling, the promise of future development and future riches seems to be a cold comfort.
The post Indonesia’s Nickel Business Is Boosting Development and Ruining Lives appeared first on Foreign Policy.
