Debunking the value-added myth in nickel downstream industry

Economic and health impact of nickel industry in Central Sulawesi, Southeast Sulawesi, and North Maluku

The global demand for nickel has risen dramatically with the rise of electric cars. In an attempt to increase Indonesia’s revenue by exporting only processed nickel, Indonesia’s President Joko Widodo banned the export of nickel ores in 2020. The ban on nickel ore exports and increased domestic processing have raised nickel export values from USD 4 billion in 2017 to USD 34 billion in 2022, or an increase of 750%. Yet, claims of positive impacts from nickel downstreaming often overlook the effects on environmental risks and public health.

This study on the health and economic impacts of nickel processing debunks the supposed economic gains as it reveals the economic, ecological, and public health impacts of the industry, with a focus on the top three locations for nickel smelting operations: the provinces of Central Sulawesi, Southeast Sulawesi and North Maluku. 

The nickel industry’s current growth pathway in the focus regions would contribute USD 4 billion (IDR 62.8 trillion) in the fifth year of construction. From then on, the industry’s negative impacts on the local ecology begin to affect the total economic output, becoming more drastic after the eighth year.

The industry’s reliance on coal power would lead to at least 3,800 annual deaths in the next two years, and nearly 5,000 by the end of the decade, causing an economic burden of USD 2.63 billion and USD 3.42 billion per year in the same period.

 The decline in water, soil, and air quality would lead to a decrease in the livelihoods of fishermen and farmers in the vicinity of industrial areas. The report projects that over the next 15 years, farmers and fishermen will incur losses of up to IDR 3.64 trillion (USD 234.84 million).

CREA: Lauri Myllyvirta, Lead Analyst Katherine Hasan, Analyst Jamie Kelly, Air Quality Analyst Jobit Parapat, Researcher; CELIOS: Bhima Yudhistira Adhinegara, Executive Director Atina Rizqiana, Researcher Fiorentina Refani, Researcher Nailul Huda, Researcher Lay Monica, Researcher Jaya Darmawan, Researcher Wishnu Try Utomo, Coal Advocacy Manager

Partners: Center of Economic and Law Studies (CELIOS)

Indonesia