Indonesia’s nickel industry is the ‘poster child of tradeoffs’ for the battery economy

Editor’s note: This is part three of a five-part feature series on global battery supply chains. The reporting borrows from a new season of The Big Switch called “The Great Battery Boom,” produced by Columbia’s Center on Global Energy Policy and Latitude Studios. Listen to episode three below, or find the show anywhere you get your podcasts.

Indonesia’s booming nickel industry is coming under increasing scrutiny for pollution, toxic waste, and worker deaths as it rapidly expands its capacity to produce nickel for electric vehicle batteries. EV manufacturers like Tesla, BMW, and Volvo sell EV models with nickel-based batteries.

“A couple of years ago, Elon Musk [and] Tesla, they were always saying if you have high-class nickel, we are going to pay for it,” said Tom Moerenhout, a research scholar at Columbia University’s Center on Global Energy Policy. In a 2020 earnings call, Musk put out an open call to “please mine more nickel.” 

But Tesla’s rhetoric has changed as the Indonesian nickel industry has drawn criticism for deforestation, coal pollution, and worker deaths. 

“Right now [Musk] doesn't talk about nickel anymore,” said Moerenhout. 

And yet Tesla is still buying nickel from Indonesia. Last year the company, which sold 17% of the world’s EVs in the third quarter of 2023, signed a $5 billion deal to buy nickel from the country. 

“So I think they're kind of happy to accept it right now as a necessary evil,” said Moerenhout, “because it's been very good for the battery markets, gives them more stability as well.”

‘High prices’ for local communities 

In 2022, Indonesia produced nearly half of the world’s nickel, according to the U.S. Geological Survey. Most of this nickel is used for stainless steel, but a growing share goes into making batteries. And by 2030, Indonesia is expected to produce about 60% of global nickel, according to Benchmark Mineral Intelligence.

It’s the kind of growth that sets off alarm bells for environmentalists. Open-pit nickel mining has led to deforestation in Indonesia, while coal-fired power plants — used to power nickel smelters — have caused water pollution. Within the production of Tesla’s nickel-cobalt-aluminum batteries, steps involving nickel are the most carbon-intensive, comprising 36% of those batteries’ emissions, according to the company’s 2022 Impact Report.

Indonesia has long had high-grade nickel deposits. “But Indonesia is running out of that kind of ore,” said Rebecca Tan, Southeast Asia bureau chief for the Washington Post. The country is left with low-grade ores, she explained. “And this consists of less than 1.5% of nickel. It's extremely hard to extract, and one of the only ways to do so is high-pressure acid leaching.” 

High-pressure acid leaching, or HPAL, is a risky processing technique for extracting nickel from low-grade ore. HPAL produces vast amounts of toxic waste, which increases the risks of a major spill in the tsunami- and earthquake-prone archipelago. A joint venture between Harita Nickel and Lygend Resources developed an HPAL facility on Indonesia’s Obira Island in 2021. 

“It is an island with seismic activity, so you cannot exclude the possibility of earthquakes or other things,” said Moerenhout. “It's not inconceivable that at one point there will be a pretty big tailings dam disaster,” he said, comparing a potential disaster to the deadly 2019 Brumadinho Dam collapse in Brazil.

But hitting global net-zero goals requires a rapid buildout of low-carbon technologies, often at the expense of safeguarding communities that live near mining and processing industries. The tradeoffs are monumental.

“This Indonesian nickel story, this is the poster child, if you wish, of those tradeoffs,” said Moerenhout. “We need to do climate change mitigation, but it's going to harm people at a local level and also biodiversity and the environment at a local level.”

It’s a path that Indonesian President Joko Widodo, known in the country as Jokowi, is betting will boost economic growth. He has overseen a concerted effort to build EV battery supply chains in the country. 

But local activists argue that this tradeoff is not worth it.

“Jokowi always says that [the] electric vehicle is the future, the solution of [the] climate crisis because it has low carbon,” said Imam Shofwan, an activist with Indonesia’s Mining Advocacy Network JATAM. “We found that there are high prices that should [not be] paid by the people around the mining areas. So I need everyone to know that this business is unfair.”

Indonesia’s nickel strategy faces challenges

The Widodo administration’s push to expand production is part of a larger effort called downstreaming. The government’s goal is to export high-value commodities, like refined metals and manufactured batteries, that are further down the supply chain than low-value raw ones, like nickel, bauxite, and cobalt.

“It very much thinks that the EV revolution can transform it into basically the equivalent of Saudi Arabia or parts of the Middle East,” said Tan.

Nickel, in particular, has played a key role in this strategy. In 2020 Indonesia banned raw nickel exports which spurred rapid investment in domestic processing plants to produce refined nickel for stainless steel and batteries. 

But the nickel strategy faces some headwinds beyond environmental and social concerns. The price of nickel has fallen as demand for EVs underperformed expectations and a glut of nickel hit the market. The European Union also won a ruling against Indonesia’s raw nickel export ban at the World Trade Organization in November 2023. And a nickel-free battery chemistry, lithium-iron-phosphate, known as LFP, is rapidly gaining ground in the global battery market, reaching an estimated 42% of global gigawatt-hour capacity sold in 2023, according to data from BloombergNEF.

Still, the International Energy Agency projects that demand for nickel will grow substantially by 2040, a sign that demand for Indonesian nickel is unlikely to ease up any time soon.

Want to dig in further? Listen to the third episode of “The Great Battery Boom” with Dr. Melissa Lott, as she explores the complexity of battery supply chains, from mining to manufacturing.

Transcript

Melissa Lott: Last time on The Big Switch...

Ernest Scheyder: If we think climate change is the existential threat facing our planet, we have to be having a broad conversation about where we want to get the minerals that build these products.

News clip: Lithium is one of the most coveted materials in the world right now. Some call it white gold.

Aimee Boulanger: Those who know industrial scale mining know that it involves impacting tremendous landscapes and the people who live around it.

Tibisay Zea: The indigenous communities are divided. Some of them see an opportunity in this mining.

Juan Carlos Jobet: How do we evaluate and solve the trade-offs in projects that have inevitably some negative impact in local environment and ecosystems, but that are essential to stop climate change?

Melissa Lott: Batteries can allow us to replace the gasoline in our cars or diesel in our generators with electricity. But batteries and petroleum-based fuel share something in common, they both rely on extraction and then changing those raw materials into something else.

Tom Moerenhout: Somewhat of a good comparison would be crude oil, right? You get crude oil out of the ground, you can't put that in your tank. You're going to do that, nothing is really going to happen, right? You need to put that into a refinery to turn into petrol or diesel or something that can be used in a vehicle, right? It's very similar for critical minerals. You get it out of the ground, it's utterly useless. It's a rock, right? So you need to process that into something that can be used in industrial applications.

Melissa Lott: This is Tom Moerenhout. He's a colleague of mine at the Columbia University Center on Global Energy Policy and an expert on battery supply chains. You heard him talking geopolitics in episode one. Here he explains that before you make a battery, you have to transform raw materials like lithium, copper, and cobalt into ingredients that go into a battery.

Tom Moerenhout: And that transformation, that includes things like crushing, grinding, concentration, smelting, leaching to get that raw material ready to be used in something like cathodes for example.

Melissa Lott: This middle stage of the supply chain is called processing, and it's a critical one. Because to make a lot of affordable batteries which we will need to help decarbonize society, we have to process a lot of minerals. It also matters because processing minerals is a big and lucrative business.

This is why countries are using a lot of different strategies in order to lure these big companies to their shores. And if one government were the poster child for using this type of industrial strategy, it probably would be Indonesia.

Rebecca Tan: So Indonesia, it has nickel, it has bauxite, it has cobalt, and it very much thinks that the EV revolution can transform it into basically the equivalent of Saudi Arabia or parts of the Middle East. It very much believes that these EV minerals can help do to it what oil once did for parts of the Middle East.

Melissa Lott: The growing market for batteries and electric vehicles is driving up demand for raw minerals. And while the mining and extraction step is an important one, processing them is often the more lucrative step. This is why some countries that have raw minerals, I'm talking about Indonesia, Chile, Australia, are building their own processing industries. They're hoping to capture more of the value of the whole battery supply chain. But there's a catch. Mineral processing involves facilities that are big and energy intensive, and that industry can have strong safety and environmental regulations, or not.

Rebecca Tan: You end up with a huge amount of waste. This is waste that if it's not managed and handled properly can have pretty devastating effects for the environment and for the local communities who live around the mine.

Melissa Lott: Rebecca Tan is the Southeast Asia Bureau chief at the Washington Post, and she traveled to one of the remotest parts of Indonesia to try to understand the impact of the country's rapidly expanding nickel industry, including things like industrial waste, coal pollution, and mining runoff.

Rebecca Tan: As we approached the coastline where the mine was, it was pretty staggering because we were on a speedboat for two hours surrounded by clear blue waters. And then as we started to approach the coastline where the mining facility was, the water around us physically started to turn. And by the time we were at the beach, the water around us was entirely mud colored, almost completely opaque.

Melissa Lott: In this episode, we're going to hear more from Rebecca about what she saw at one of these mineral processing plants in Indonesia. And we're going to hear from an activist who's fighting the industry. It's a case study in mineral processing.

We also talk to experts who say we need to process lots of minerals to fight climate change, which leads us to one big question. Can we process all those minerals in a responsible way?

This is The Big Switch, a show about how to rebuild the energy systems that are all around us. I'm Dr. Melissa Lott and I'm the director of research at Columbia University's SIPA Center on Global Energy Policy. This season, we're digging into batteries. From cars and heavy equipment to the electric grid, batteries are finding their way into everything around us. But scaling up battery production to meet the demands of a net-zero economy, well, that's complicated and it's contentious. And in a complex battery supply chain, we really need to ask the question, what gets mined, traded and consumed on the road to decarbonization?

This is the third installment in our five-part series. In our previous two episodes, we talked about the geopolitics of the battery supply chain. And we walked through the first step in making lithium batteries, that's mining the critical minerals from the earth. In this episode, we're going to dig into step two of the supply chain, processing all of those minerals into usable ingredients for batteries.

Making a battery is a bit like making a cake. Okay, so stay with me for a minute. Just like a cake, a lithium-ion battery starts with a bunch of raw materials or ingredients. So Tom, can you talk me through what is mineral processing? If you just had to sum it up, what is it?

Tom Moerenhout: So basically you get out the rock, right, the raw ore, and that's got a lot of stuff that you don't need. So processing is basically separating the minerals that we want from the rock that includes everything that we don't want. So that includes crushing, grinding, concentration, smelting, all these type of processing techniques to basically just keep the minerals for what you need them.

Melissa Lott: When we make a cake, most of us don't think about where our ingredients actually come from, but someone somewhere had to turn wheat and milk and sugar cane into flour, butter and the granulated sugar that we find at the store. And to make batteries, someone has to turn lithium, copper, cobalt, and other minerals into battery ingredients because you can't bake a battery without them.

Sam Jaffe: The most important material that goes into the battery is the cathode powder.

Melissa Lott: Sam Jaffe is another battery expert. For years, he was a research analyst in the industry. And now he works for a company that manufactures copper current collectors, which is one of the many parts that goes into a battery. And he says that most of the world's processing of cathode powder happens in China, and it takes a lot of steps.

Sam Jaffe: The cathode powder starts with metal salts. And in this case, usually it's made out of NMC, which stands for nickel, manganese, cobalt, and lithium. So it should be LNMC, but people call it shorthand, NMC. So if you go to the Chinese infrastructure today, you would start by importing nickel metal. So these big briquettes of pure nickel, as well as cobalt hydroxide for the cobalt. So the cobalt hydroxide comes in as concentrate. So it's literally mud that's been taken from the cobalt mines, and they're shipping that mud in ships to China, and then that's going to be processed into cobalt hydroxide.

The nickel metal will be dissolved in these enormous tanks that are the size of maybe four or five swimming pools into water with sulfuric acid to turn it into nickel sulfate. So then you end up with these salts. Nickel sulfate, manganese sulfate, and cobalt hydroxide, and then those are mixed together. And then those are in an enormous furnace and they're heated to tremendous temperature where those three materials bond together into a powder. And now you've got what's called precursor. After many hours in that furnace at as much as 800 degrees Celsius, it comes out as a black powder.

Melissa Lott: And then, see, I wasn't kidding. There were a lot of steps. After all that, you add in your lithium, the stuff we pulled from the salt flats in Chile in episode two or from hard rock lithium mines in Australia.

Sam Jaffe: And then that is put into a furnace, and again, roasted at very high temperature. And then it's treated and dusted with a few other materials, and then you've got your cathode powder.

Melissa Lott: All that to make only one ingredient that goes into a battery. And those aren't even all the materials that you need. So there's the copper and aluminum for the current collectors. And then there's cobalt, nickel and manganese that go into the cathode material and the graphite and silicon that goes into the anode. And then there's this liquid chemical called the electrolyte that allows our battery to store and release electricity.

Sam Jaffe: So we're really talking about somewhere between 10 and 20 separate industries, all of which have to grow somehow at the same pace and supply at the right moments.

Melissa Lott: And like Sam alluded to earlier, right now, most of those industries are concentrated in one country, China. More than half of the world's lithium, cobalt, and graphite processing happens in China. It's also the largest processor of nickel and rare earth elements. When we look at supply chains, we see that countries that have these large mineral reserves actually lose out on a lot of the battery making business by not processing in their own country. For example, Australia produces nearly half of the world's lithium according to the US Geological Survey. The Democratic Republic of Congo produces 70% of the world's cobalt. But industries in both of these countries ship those unrefined minerals to China for processing.

For anyone who's concerned about the security of supply chains, China's processing power is a huge red flag, not just because of processing, but because China also mines a lot of critical minerals and manufactures a lot of lithium-ion batteries. So combined, this means that China has a pretty tight grip on the entire battery supply chain, a supply chain that we need to transition to green energy fast. Do you remember Tom Moerenhout's take on this from episode one?

Tom Moerenhout: So China is definitely building geopolitical leverage with their control over those supply chains. I think other countries are currently reacting to it.

Melissa Lott: Back in 2020, one country in particular reacted in a big way.

New clip: The price of nickel ore has surged to a five-year-high, and it comes after the world's largest nickel producer, Indonesia, announced an export ban of the raw commodity from as early as January next year, two years earlier than it had planned. That's also say-

Melissa Lott: Indonesia has been the world's biggest producer of nickel for a lot of years. And in the past, the country would ship most of its ore to China where it would be made in a stainless steel. But with rising demand for lithium-ion batteries, Indonesia saw an opportunity to be an even bigger player in nickel supply chains.

News clip: But this is also part of President Joko Widodo's efforts to speed up capturing more of the processing of the ore within Indonesia, a pledge that he reiterated in his address to parliament last August. The projects will also help Indonesia accelerate the development of the electric vehicle battery industry.

Melissa Lott: The move to ban raw nickel exports might sound counterintuitive because it costs Indonesia's own nickel industry billions of dollars in lost sales, but it also forced companies to invest in nickel processing facilities, the ones you need to be able to export more valuable refined products. It's part of a larger strategy by the government's leaders called downstreaming. Instead of exporting raw materials to be processed elsewhere, Indonesia wants to process those products at home. The nickel export ban was one of the first big steps in that direction, but the country wants to do the same thing with copper and tin. The hope is that mining, processing, and creating products from these natural resources, especially battery materials, will do for Indonesia what oil did for countries like Saudi Arabia. And it's already leading to big changes in the country's economy and environment.

Rebecca Tan: So Indonesia is an archipelago, and Obira is one of its many hundredths of islands. Getting there is really quite difficult. We took an 18-hour ferry and another two hours by boat and a lot of driving on horrible roads.

Melissa Lott: Rebecca Tan is the reporter that you heard from at the top of the show. She's the Southeast Asia Bureau chief at the Washington Post, and she traveled to one of the remotest parts of Indonesia to see the impacts of the country's rapidly expanding nickel industry on a place called Obira Island.

Rebecca Tan: So when you get there, it's a lot of forests, it's blue seas. And then as you're kind of turning the corner on the speedboat, you see this giant towering development, new industrial development that's kind of quite near the coastline and right above one of its smaller villages.

Melissa Lott: This giant towering industrial development on Obira Island is both an open pit nickel mining facility and a nickel processing refinery. It's a case study for how the economic forces behind global battery supply chains are playing out in one place.

Rebecca Tan: Nickel in general in the past has been used in mine primarily for steel. For a long time, that's what Indonesia was in the business of doing. It was mining and creating nickel for steel. But in the Obi islands, over the past couple of years, they've started to experiment with something new, which is creating nickel for EV batteries.

Melissa Lott: This industrial park on Obira Island is jointly operated by the Indonesian nickel company, Harita Nickel, and the Chinese company Lygend Resources, which in turn send their nickel down the supply chain.

Rebecca Tan: Most of the nickel that's being refined here in Obira is ending up at CATL, China's biggest battery manufacturer. And they make batteries for Tesla, Ford, Volkswagen, any number of car companies that American listeners will recognize.

Melissa Lott: A majority of nickel that's mined in Indonesia today still goes into making stainless steel. But moving forward, the share that is processed for batteries is expected to increase dramatically. And to make nickel for electric vehicles, which are the biggest source of demand for batteries, Harita and Lygend's processing plants will have to produce a particular kind of nickel.

Rebecca Tan: The type of nickel that you need for EV batteries has to be a lot more refined. It has to be a much higher quality. And so there are different processes and kind of refining steps that you have to take to produce them. It started experimenting with these types of processes at Obira.

Melissa Lott: Rebecca spoke with our producer Daniel Waldorf about these processes.

Daniel Woldorff: What is that technology that they're testing out?

Rebecca Tan: This technology is called high pressure acid leaching. And so, this process basically involves putting the ore into an environment of high pressure and then applying acid to it so that the nickel kind of leaches off, if that makes sense.

Daniel Woldorff: When you are on site, what are you seeing that's actually doing that process?

Rebecca Tan: You're using these very large titanium vessels. You're mixing pretty expensive chemicals including the acid to leach this nickel off the ore. And these large titanium vessels, there's a humongous amount of pressure that's being exerted into the chemicals inside them, and then eventually end up with a very small product, your refined nickel, but a massive amount of waste,

Melissa Lott: HPAL or high pressure acid leaching is nothing new.

Rebecca Tan: It's actually technology that's existed for quite a long time, but it hasn't been broadly used because there have been some major concerns. It's hard to manage. A lot of projects that have tried to use HPAL in the past, they've had cost overruns, they've had issues managing waste, they've had various incidents and accidents. And so it's kind of not been used for a long time until recently.

Melissa Lott: Over the past few years, Indonesia has been running out of the high quality ore that it's easier to get nickel from, but the country still has a lot of low quality ore, and HPAL is really good at getting high purity nickel out of really low quality ore. It's been this win for battery supply chains, but Indonesia's environment is taking a hit, especially in places like Obira Island and Sulawesi. Here's Tom Moerenhout again.

Tom Moerenhout: This is the new big innovation in the nickel market. And that has really brought security in terms of supply and price to the nickel market. But the technology is really, really dirty. So from an environmental standpoint, you get three big environmental impacts. The first one is because of the type of deposit you need to strip a lot of land to get to your deposits, and this is pretty pristine land. Second one is that it's quite energy-intense, and that energy comes from coal-fired power.

Melissa Lott: A quick pause here. So the fact that Indonesia is burning coal to make battery materials is definitely a big concern, not just for greenhouse gas emissions, but for air quality and water quality. It shows us this catch 22 that we're facing when it comes to clean energy industries that also use a lot of resources. In order to make low carbon technologies like batteries, wind turbines, and solar panels. Some places will have to burn carbon emitting fuels like gas and coal.

So here's the question, is it all just a wash? Well, we've looked at the studies and the answer is a resounding no. Even if we burn coal to make batteries, those batteries will lead to net negative emissions because they help to decarbonize heavily polluting parts of the economy like transportation and the power grid itself. In short, those low carbon technologies are critical for the long-term health of the planet, even if making them means generating more emissions in the short term. To put carbon emissions in dollar terms, you have to spend money to make money. But we don't have a lot of money left, so it's a hard trade off to accept.

Okay, back to Tom and the environmental impacts of HPAL and nickel mining.

Tom Moerenhout: And third, and maybe most importantly, is that this type of high pressure acid leaching leads to a whole lot of waste. For every ton of nickel, you've got about 1.2 to 1.4 tons of waste, which includes sulfuric acid of course, but other pollutants as well.

Rebecca Tan: This has always been the catch with HPAL, which is that it allows you to perform the extremely difficult thing of extracting nickel from an ore that has very trace amounts of it, but you end up with a huge amount of waste. This is waste that if it's not managed and handled properly can have pretty devastating effects for the environment and for the local communities who live around the mine.

Daniel Woldorff: Are we seeing those sorts of things on Obira Island?

Rebecca Tan: There used to be less vegetation in this part of Obira before the miners came. Even after the mine itself was set up, vegetation around the mine was fairly healthy, residents said. It was only when the refinery came that there would be rows of trees that started to die off. And a lot of this was runoff and waste coming from the mine. Residents there, they don't know what's in the water, only that it's made it much harder for them to live, to find fish for example. And so it's affected their lives in pretty fundamental ways.

Melissa Lott: The challenge of heavy industry in many places, but especially in countries with weak environmental regulations like Indonesia, is that there's little oversight. And at the Harita and Lygend operation, a whole lot of things could be causing pollution. The mining itself, the coal-fired power plants or the HPAL waste. And beyond this current pollution, there's another big problem. Indonesia could be an especially dangerous place to store all that waste.

Rebecca Tan: I think the issue and the big risk in Indonesia that a lot of people are worried about is that this is a country where there are monsoon rains for half the year. This is a country that sits on one of the most seismically active parts of the entire earth. There are volcanoes, there are earthquakes, there are tsunamis that happen quite frequently including in this part of the country. And so there's a more than sizable risk of the possibility of these kind of natural events interfering with the waste. In which case, the big question is, what would happen to the local communities? What would happen to the people living around this giant mountain of toxic waste? And it's not really a question that the government has meaningfully reckoned with yet.

Daniel Woldorff: What does the government say about these concerns and these allegations of pollution?

Rebecca Tan: I think in short, their responses, "We're aware. We're working on it, but the opportunity presented by nickel is too big to let this slow us down basically." Indonesia has been a developing country for a long time. It has a huge population that it very much wants to live out of poverty. For many, many decades, it's relied on its very rich minerals to drive development and industrialization, but it hasn't achieved the level of success that it's wanted to. And now it sees for itself this golden opportunity with EV minerals.

Melissa Lott: At the center of Indonesia's push for in-country battery mineral processing is its president, Joko Widodo. He's also known in Indonesia by his nickname, Jokowi. He has overseen an economic boom in many industries including battery supply chains, which he talked about before the G8 Summit last year in Bali.

Joko Widodo: When we, the industry here, are ready, exports automatically will stop. What we want is to build a large ecosystem to produce electric cars, as many as we can, here in Indonesia.

Melissa Lott: Jokowi wants to use Indonesia's natural resources, especially minerals, to make the country an economic and geopolitical powerhouse, a strategy that has been popular in the country where he has incredibly high approval ratings. But there are some who see the environmental impacts of the nickel industry and disagree.

Imam Shofwan: There [is] a lot of massive deforestation and people lost their source of living around the nickel mining areas.

Melissa Lott:

We talked to one activist with an organization called the Mining Advocacy Network, which goes by the Indonesian acronym JATAM. His name is Imam Shofwan, and he says that the rice patties near nickel mining on the island of Sulawesi have been negatively impacted.

Imam Shofwan: For the last 10 years, the patties cannot be productive anymore since the yellow water from the river, affected by the open pit nickel mining, [was] exposed the patty farm and it destroy all the patties farming.

Melissa Lott: He says the nickel mines and processing plants have impacted the fishing industry and also drinking water.

Imam Shofwan: When the people turn off their tap water in their kitchen, the yellow water will come out.

Melissa Lott: The specific causes of these kinds of impacts are unclear. For example, it could be nickel processing runoff from the mine or waste from coal plants. But Imam stresses that Indonesia has lacks environmental regulations in general and the nickel industry and the related coal industry know that, which leads Imam to be skeptical of benefits for Indonesia's battery and EV ambitions.

Imam Shofwan: Jokowi always [says] that [the] electric vehicle is the future, the solution of [the] climate crisis because it has low carbon. In the field, we found that there are high prices that should [not be] paid by the people around the mining areas. So I need everyone to know that this business is unfair.

Melissa Lott: Which begs the question, what do buyers of these process materials think about the environmental impacts of Indonesia's nickel industry? I asked Tom Moerenhout.

So how are battery and EV manufacturers and industries reacting to this? And I'm talking about the impacts of nickel processing on the environment. And specifically in the Indonesia case, are they doing anything about it? Is there some kind of conversation happening? What's going on?

Tom Moerenhout: If I'm honest, I wish more was happening. A couple of years ago, Elon Musk, Tesla — they were always saying, "If you have high class nickel, we are going to pay for it." Right now he doesn't talk about nickel anymore. So I think they're kind of happy to accept it right now as a necessary evil because it's been very good for the battery markets, gives them more stability as well. But now they also realize that this may become a problem in the short to medium term. So they are definitely pushing on several fronts, one being the emissions. So for them that's important because that's scope 3 emissions upstream. So they're definitely trying to encourage alternative production. This can be with hydro. This can be having some type of variable renewable energy involved as well. And then on the side of biodiversity, I think there is a lot of fear that we could see something like the Brumadinho dam collapse.

Melissa Lott: The Brumadinho dam in Brazil held waste from iron ore mining until January of 2015.

New clip: On January 25th, sludge flooded out of the bowels of the earth. Nearly a million cubic meters of mine waste spilled over 7 kilometers destroying everything in its path.

Melissa Lott: The collapse of this dam killed at least 260 people with many others never found. This is the scale of disaster we worry about happening with HPAL waste in Indonesia, which is prone to tsunamis, earthquakes, and monsoons.

Tom Moerenhout: This just shattered the mining industry in Brazil to a certain extent, right? This was a huge reputation problem. And EV battery makers are aware that this could become a big issue. So they're definitely pushing for having higher environmental standards in this process.

Melissa Lott: So I'm trying to get my head around how we should think about these types of arguments. On one hand, we need the nickel to fight climate change, which impacts communities. But on the other hand, the communities that house processing are facing really near term negative environmental impacts. How do you think through these arguments?

Tom Moerenhout: I mean, first of all, I think these arguments are absolutely valid, 100%, full stop. This Indonesian nickel story, this is the poster child, if you wish, of those trade-offs that we have with respect to climate change mitigation. We need to do the climate change mitigation, but it's going to harm people at a local level and also biodiversity on the environment at a local level, right? And so this is one of these cases where this is really evident. It's a difficult one.

Melissa Lott: It is a difficult one. Globally, building out battery supply chains and building them really, really fast is a clear win for our health and the environment. But it is not a clear win for the local communities near industrial sites like refineries and mines. These are the communities that face the negative impacts of pollution and the risks of industrial disasters that can come with processing. And if these types of disasters become reality, it can actually slow down mitigation efforts, harming the reputation of the energy transition itself and also slowing down right when we need it to speed up.

Tom Moerenhout: It's not some type of Hollywood story where we are all happy in the end, everything is wonderful and lollipops and rainbows. So it is a huge struggle for biodiversity. So the question is what do you do about it?

Melissa Lott: It turns out there are some things we can do. They're just a bit complicated.

Tom Moerenhout: Consumers saw people driving electric vehicles, but also consumers in terms of automakers and battery manufacturers need to really require higher standards on the processing side. And we have those standards today. They exist. It's a bit of a Jackson Pollock painting of standards right now. There's a whole lot of them and it's difficult to navigate. But at least we have them and things are evolving. So that together with sound regulations, together with requirements for somewhat of a net positive impact approach. So meaning that you go through the hierarchy of avoiding harm where possible, minimizing it after that rehabilitation and restoring if needed, and finally offsetting residual impacts.

Melissa Lott: So how do we get those regulations? The first step is that the consumers of these products and their governments can exert pressure on the supply chain. One opportunity for this is in trade agreements, for example, with the United States.

Joe Biden: I've told you this before, but Indonesia is a critical player, critical in the clean energy transition in the world.

Joko Widodo: It is an honor for me to fulfill the invitation from President Biden to visit Washington, DC.

Melissa Lott: Indonesian President Joko Widodo met with US President Joe Biden at the White House in November of 2023 to discuss strengthening the relationships between the two countries, especially on mineral supply chains.

Joko Widodo: The US is one of the most important partners for Indonesia. And for Indonesia, economic cooperation is priority, including on supply chains issues.

Melissa Lott: The US wants Indonesian nickel. And Indonesia wants access to the fast-growing US market for batteries. Governments like the US and the EU could demand tougher regulations as part of a trade agreement, which is something that they hinted at in their joint press release by saying, and I quote, "They affirm the importance of strong worker and environmental protections to prevent exploitation and promote sustainability in the international mining sector." But these are just talking points right now. Indonesia doesn't have strong regulations today. And even if there were tougher regulations, it would be reasonable to expect that there be a trade-off with speed. Our producer Daniel asked Rebecca Tan to weigh in on Indonesia,

Daniel Woldorff: What do the government and these companies have to lose by say, allowing third party audits or upping their standards for pollution control? Why don't they just do this?

Rebecca Tan: At the moment, they've been able to dominate this sector in part because their environmental regulations are more lax. Australia actually has comparable nickel reserves to Indonesia, but a fraction, a small fraction of its nickel production because in Australia, there are significant environmental regulations and a range of different processes you have to go through to set up a mine. To set up a refining facility, you have to consult the local communities, you have to get their permission, you have to show that you are disposing of the waste in so and so ways, and that's not how things are run exactly in Indonesia.

And so for the people with money and for organizations and companies, it's much easier. It's much faster to get stuff done in Indonesia. This is in a context where global demand for EVs and global demand for EV minerals is pressing. It's urgent. People want it now because the transition is happening now and because companies want to be able to profit now. And so the lax environmental regulations has been part of how it's been able to dominate the sector. I think if they really beef up on their regulations, they risk slowing down that economic progress or undercutting the potential gains from the economic opportunity.

Melissa Lott: Which brings us to another potential solution. Can we scale up mining and processing in countries that already have stronger environmental standards? For example, Australia already has a lot of nickel in the ground, including high grade ore called sulfide ore, but also the lower grade ore called laterite, the same stuff that Indonesia is processing using HPAL. Just where we process minerals matter. How does nickel processing in Australia compare with nickel processing in Indonesia?

Tom Moerenhout: So again, I don't want to go too technical, but Australia has sulfide ores. So the same like Canada and Russia. So actually, what we're seeing there in Australia is lower environmental impacts. So more than the location, I would say what really matters is the type of ore. So Australia has a lot of these sulfide ores that are more easily processed into this high quality nickel. But all the growth is also in laterite ores also in Australia. And the processing that we use in Australia is actually incredibly energy intensive, much more energy intensive than this high pressure acid leaching in Indonesia. So if you're lucky and you can find a deposit with sulfide nickel, you'll have a good time in the nickel market. The problem is that right now, we just don't see that happening very much. We've seen discoveries being very small and finding them has been very costly.

Melissa Lott: So moving processing to a different part of the world is difficult and it has some trade-offs. But what about swapping out a controversial mineral altogether? Do we even really need nickel? We talked earlier about cathode powder and what goes into it, namely NMC, nickel, manganese, cobalt. with that silent L, lithium, but there's actually a whole other chemistry of lithium-ion batteries that doesn't even use nickel, it's called LFP or lithium ferrous phosphate, AKA lithium iron phosphate.

When we talk about different battery chemistry, so I'm thinking about like NMC, so nickel, metal, cobalt versus LFP, so lithium iron phosphate, are concerns very, very different? Or are they actually the same, they just manifest differently?

Tom Moerenhout: No, I would say they're quite different. So lithium-ion phosphate, those cathodes, I would say on average have lower sort of environmental and social impacts, right? Let's be honest. Cobalt, the problem there is a certain percentage of your mines are artisanal mines with human rights concerns. That's the problem with cobalt. Nickel, the problem is going to be on the environmental side linked to this high pressure asset leaching.

Both of those minerals you don't find at all in an LFP cathode. So you really only have lithium. And if I would say there's one of the more cleaner critical minerals with respect to social impacts and environmental impacts... And I'm not saying there's none, right? But if you compare lithium to a nickel or a cobalt, it's definitely much cleaner. So those batteries just struggle less with this type of environmental and social considerations. And I wish, I hope that at one point, consumers, end consumers of electric vehicles will know that.

Melissa Lott: So going back to our cake metaphor from the top of the show, LFP is like a different recipe that doesn't have nickel in it, kind of like a gluten-free cake. And LFP is being used more and more. Tesla, Ford and Volkswagen are all increasingly using LFP batteries. These batteries tend to be heavier and less energy dense, and therefore manufacturers might end up making cars with shorter ranges. But LFP batteries are also longer lasting, safer and cheaper. And so analysts predict that they'll become an increasingly dominant chemistry in the market. But in the meantime, many, many batteries are still NMC, meaning they still use nickel.

Are there any international efforts or organizations that are trying to implement solutions to these big problems that we're seeing across all the different minerals we need for the energy transitions? I'm thinking about nickel, copper, lithium, and a whole host of other things. Are there any organizations that are trying to tackle this at a global level?

Tom Moerenhout: Many, many, many. And I think that's what gives me hope as well. I don't want to go through a whole list, but you have the Intergovernmental Forum on Mining, Minerals, and Metals. You have the Initiative for Responsible Mining insurance, the International Council on Mining Metals, and then sort of mineral specific organizations as well, The Copper Mark, the Fair Cobalt Alliance and so forth. So we actually have a whole lot of international organizations on the civil society side, but also governmental groupings that are really trying to make this or turn this sector into a more responsible 21st century material sector.

Melissa Lott: The Big Switch is produced by Columbia University's SIPA Center on Global Energy Policy in partnership with Latitude Studios.

This marks the end of our third episode in our five-part battery series. We have two more on the way where we'll cover manufacturing and recycling. If you appreciate the reporting and storytelling that we're doing here, you can rate and review the show on Apple and Spotify. You can also send a link to a colleague or a friend you think would like it. And you can find all of our back episodes along with this current season wherever you get your pods.

This show is produced by Daniel Waldorff, Mary Catherine O'Connor, Anne Bailey and Stephen Lacey. Anne Bailey is our senior editor and Sean Marquand wrote our theme song and mixed the episodes. A special thanks to our Columbia team, Harry Kennard, Natalie Volk, Kyu Lee, Jen Wu, and Liz Smith, and also Tom Moerenhout. This show is hosted by me, Dr. Melissa Lott. Thank you so much for listening. Stay tuned for episode 4 coming next week.