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Several major companies, including US carmaker Ford, Brazil’s Vale, China’s Tsingshan, and Hong Kong’s Jardine Matheson, have invested in nickel projects in Indonesia that are causing widespread deforestation in some of the world’s most biodiverse forests. New data from environmental group Mighty Earth and its partner Brown Brothers Energy and Environment reveals that approximately 76,301 hectares of tropical forests, equivalent to the size of New York City, have been cleared within 329 nickel concessions. Around 30% of this area, or 23,000 hectares, has been deforested since 2019 due to the increased demand for electric cars and the nickel batteries required to power them. Indonesia, with its vast nickel reserves, hopes to become a major player in the global electric vehicle supply chain. However, the deforestation, along with waste, pollution, high carbon emissions, and the displacement of communities, has put pressure on both the government and mining companies to address these issues. It has also pushed carmakers to seek alternative sources of nickel, such as Australia. In March, President Joko Widodo announced that Indonesia would intensify monitoring of the sector and require companies to reforest depleted mining areas.
The latest deforestation data was obtained through the University of Maryland’s Global Land Analysis and Discovery (Glad) and Wageningen University’s Radar for Detecting Deforestation (Radd). These organizations receive alerts indicating disturbances in the forest canopy, which suggest that trees may have been lost or removed. Indonesia’s nickel deposits are located in ultramafic forests, which are biodiverse due to their high metallic content, making them unsuitable for farming. Environmental groups and analysts have warned that Indonesia is at risk of repeating the mistakes made in the palm oil industry, which is associated with extensive deforestation, unless more measures are taken to protect forests from nickel mining. Amanda Hurowitz, senior director at Mighty Earth, stated that “we are risking a palm oil 2.0 situation with deforestation for nickel mining.” Deforestation in the palm oil industry has decreased significantly due to government action and voluntary initiatives by companies to reduce or eliminate deforestation. If the same standards were applied to nickel mining, many concessions would be off-limits due to their biodiversity, according to Hurowitz. The loss of biodiversity is a major concern in the Indonesian nickel industry, as noted by a former mining executive in the country who described it as an acute issue.
Melissa Cheok, associate director at Sustainable Fitch, a rating agency’s environmental, sustainability, and governance research business, commented on Indonesia’s struggle to balance social and environmental protections with economic gains in relation to its abundance of natural resources. Cheok stated that if the government fails to deliver on its promises to protect the environment while mining for metals like nickel, it could undermine its commitment to the green transition and damage its overall credibility, which in turn could erode investor confidence.
Independent experts have noted that the data on nickel concessions does not take into account rehabilitation efforts, and some of the cleared areas may be linked to agricultural projects. However, it is still the responsibility of the mining companies holding the concessions to address these issues. Vale, a Brazilian mining group, is operating three of the top five projects with the highest level of deforestation. Its sites in Soroako, Pomalaa, and Bahodopi on Sulawesi Island have seen 19,638 hectares of deforestation since 2014. Vale has partnered with China’s Huayou Cobalt and Ford on the Pomalaa project. The company stated that it has rehabilitated 13,527 hectares of forest, with approximately 3,500 hectares within its concessions and 10,000 hectares outside. Vale also emphasized its adherence to leading standards in environmental stewardship and land management, which have been consistently recognized by the Indonesian government. It further noted that it had cleared 5,481 hectares of land within its concessions.
Mighty Earth’s data also shows that a mining and production project on Sulawesi, jointly owned by Indonesian company Bintang Delapan Group and China’s Tsingshan, has resulted in nearly 2,738 hectares of canopy loss since 2010. Another company, United Tractors, a subsidiary of Astra International controlled by Jardine Matheson, recently acquired a 20% stake in Nickel Industries, an Australia-listed company affiliated with Tsingshan that holds the majority interest in the Hengjaya Mineralindo project. Mighty Earth analysis reveals that approximately 271 hectares within that concession have been deforested. United Tractors stated that it will monitor and promote good mining practices, including reclamation, in Nickel Industries’ mines. It also highlighted the long-term decarbonization benefits of the electric vehicle sector for the Indonesian economy. Ford and Tsingshan did not respond to requests for comment, while Huayou and Bintang Delapan also did not provide a comment.
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